Thursday, March 13, 2014

Mortgage Credit Availability Eases

Please make sure and note the difference between the estimated availability in 2006 and now, amazing!

WASHINGTON, D.C. (March 11, 2014) — Mortgage credit availability increased slightly in February 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.

"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, MBA’s Chief Economist.  "Specifically, the recently implemented QM/ATR sections of the new CFPB regulations stipulate that 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 year (also known as 3/1 ARMS).  While there was significant pull-back 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.”

Source: Mortgage Bankers Association; Powered by AllRegs® Market Clarity®

The MCAI increased 0.44 percent from 113.0 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.  The index was benchmarked to 100 in March 2012.  If the MCAI had been tracked in 2007, it would have been at a level of roughly 800, indicating the credit was much more available at that time.

Source: Mortgage Bankers Association; Powered by AllRegs® Market Clarity®

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit.

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, a summary measure which indicates the availability of mortgage credit at a point in time.  Base period and value for all indexes is March 31, 2012=100.


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