The Mortgage Bankers Association (MBA) announced on March 11 that mortgage credit availability increased slightly in February, according to data from its Mortgage Credit Availability Index (MCAI), a summary measure that indicates the availability of mortgage credit at a point in time.
The MCAI is calculated using several factors related to borrower eligibility — credit score, loan type, loan-to-value ratio, etc. These metrics and underwriting criteria for over 85 lenders/investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA to calculate the MCAI. The base period and value for all indexes is March 31, 2012, when the index was benchmarked at 100.
The MCAI increased 0.44 percent from 113 in January to 113.5 in February. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. If the MCAI had been tracked in 2007, it would have been at a level of roughly 800, indicating that credit was much more available at that time.
“For the third month in a row, mortgage lenders and investors slightly expanded credit offerings in February on net, as a result of offsetting factors,” said Mike Fratantoni, chief economist at MBA. “Specifically, the recently implemented qualified mortgage/ability-to-repay sections of the new Consumer Financial Protection Bureau regulations stipulate that adjustable-rate mortgage (ARM) loans must qualify at the highest allowable rate for the first five years of the loan. As a result, many investors have discontinued loans whose interest rate adjusts after only 3 years (also known as 3/1 ARMS). While there was significant pullback on these 3/1 programs, lenders and investors added several new 5+ year ARM programs, including those for jumbo loans, to their repertoire, resulting in a net increase to the MCAI.”