Access to mortgage credit increased again in January. The
Mortgage Bankers Association (MBA) said its Mortgage Credit Availability Index
(MCAI) rose 2.0 percent to 124.6. A decline in the MCAI indicates that lending
standards are tightening, while increases in the index are indicative of
loosening credit.

The two components of the Conventional MCAI posted
significant increases. The Conforming MCAI jumped 7.7 percent and the Jumbo
component was up 2.2 percent, pushing the parent index up 4.8 percent compared
to December. This was slightly offset by an 0.1 percent decline in the
Government MCAI.  

 

 

“The growth in credit availability in January coincides with a housing
market that is poised for a strong start to the year
. Improvements were driven
by the conventional segment of the mortgage market, as lenders added ARM loans
with lower credit score and higher LTV requirements,” said Joel Kan, MBA’s
Associate Vice President of Economic and Industry Forecasting. “Despite
ARM loans accounting for a very small share of loan applications in recent
months, lenders are likely looking ahead to a strong home buying season by
expanding their product offerings.”  

Added Kan, “Ongoing strength in home-purchase applications and home
sales continue to signal robust housing demand, even as low housing inventory
remains a constraint. However, even with overall credit availability picking up
in three of the past four months, credit supply is still at its tightest level
since 2014
.”  

The MCAI was at 181.3 in February
2020 as news of the pandemic broke. It declined by 16.1 percent in March and
another 12.2 percent in April. Subsequent smaller decreases ultimately took the
index to 118.6 in September before it began what is so far a stop and go recovery.

The MCAI and each of its components are calculated
using several factors related to borrower eligibility (credit score, loan type,
loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95
lenders/investors are combined by MBA using data made available via a
proprietary product from Ellie Mae. The resulting calculations are summary
measures which indicate the availability of mortgage credit at a point in time.
Base period and values for total index is March 31, 2012=100; Conventional
March 31, 2012=73.5; Government March 31, 2012=183.5.

By Jann Swanson , dated 2021-02-09 11:35:33

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Courtesy of Mortgage News Daily

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