Mortgage Credit Availability Widens

Mortgage credit availability increased in October according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from Ellie Mae’s AllRegs^® Market Clarity^® business information tool.

The MCAI increased 2.5% to 186.7 in October. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased (up 5.5%) and the Government MCAI decreased (down 0.4%). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.3% while the Conforming MCAI increased by 4.6%.

“Credit availability increased in October, driven largely by an expansion in the supply of conventional credit, while government credit fell slightly over the month,” said Joel Kan, MBA’s AVP of economic and industry forecasting. “Reversing a trend from last month, lenders made more conventional and low down payment programs available to prospective borrowers. This increase in supply was likely in response to a growing number of first-time home buyers in the market, as home price appreciation has slowed and wage growth has picked up. Jumbo credit availability also expanded last month, with the jumbo index increasing again to its highest level since the survey began.”

The MCAI increased 2.5% to 186.7 in October. The Conventional MCAI increased (up 5.5%) and the Government MCAI decreased (down 0.4%). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.3% while the Conforming MCAI increased by 4.6%.

The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.