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Mortgage Credit Availability Increases Slightly in July

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Mortgage credit availability increased in July according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from the AllRegs® Market Clarity® product.

The MCAI increased 0.5 percent from 115.8 in June to 116.4 in July.  A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit.  The index was benchmarked to 100 in March 2012.

The main driver in the MCAI’s increase was a rise in the number of jumbo Adjustable Rate Mortgage (ARM) programs.  Increased availability of high balance Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loan programs also contributed to the net loosening to the index.  Many investors added 5/1, 7/1, 10/1 and, in some cases, 3/1 Jumbo ARM programs.

Additionally, there was a slight loosening in lender criteria for several programs with respect to minimum credit scores and maximum loan-to-value (LTV) ratios, especially FHA and VA loans.

Starting this month, MBA will start reporting on two additional measures of credit availability as part of the monthly MCAI release: the Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011.

For more information, visit www.mba.org.

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