Credit Access Takes a Hit as HARP Expires

Credit availability suffered an unusually large decline in December.  The Mortgage Bankers Association (MBA) said its Mortgage Credit Availability Index (MCAI) fell 7.3 percent to 175.0 in December (it was 188.8 in November.)  A decline in the MCAI indicates that lending standards are tightening.

The MCAI has two major components and the loss in availability came entirely from the Conventional Index which decreased by 14.5 percent.  The Government MCAI inched up by 0.1 percent.  The Conventional MCAI itself has two components and both were down, the Jumbo MCAI by 14.9 percent and the Conforming by 14.0 percent.

MBA's Associate Vice President of Economic and Industry Forecasting Joel Kan said. "The supply of credit dropped in December to its lowest since February 2017. The decline was driven by a sharp decrease in the conventional credit space, as we saw the expiration of the Home Affordable Refinance Program (HARP).  Credit availability in government loans was stable over the month, ticking up slightly. We also saw a decline in high balance and super conforming programs, which drove the decline in the jumbo index."

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.) gathered from over 95 lenders and investors. They are combined with data from an AllRegs proprietary product to calculate a summary measure indicating the availability of mortgage credit at a point in time

The MCAI and its components are designed to show relative credit risk/availability for their respective indices and were benchmarked in March 2012. The total MCAI, Conforming, and Jumbo indices were indexed at 100 while the Conventional and Government indices were indexed at 73.5 and 183.5 respectively to better represent where each index might have been relative to 100.