The Mortgage Bankers
Association’s (MBA’s) Mortgage Credit Availability Index (MCAI) continued to drop
in August, an indication that lending standards are tightening. The index fell
by 4.7 percent to 120.9 in August. In January, before interest rates started an
unprecedented decline and servicers were instructed to grant forbearances to
existing borrowers, the MCAI was at 181.9. It was benchmarked to 100 in March
2012.

Each of the four component
indices moved lower.
The Conventional MCAI decreased 8.7 percent, while the
Government MCAI decreased by 1.4 percent. Of the component indices of the
Conventional MCAI, the Jumbo MCAI decreased by 8.9 percent, and the Conforming
MCAI fell by 8.6 percent.

 

 




“Mortgage credit supply fell to its lowest level since March 2014, driven
by a reduction in supply from both conventional and government segments of the
market,” said Joel Kan, MBA’s Associate Vice President of Economic and
Industry Forecasting. “Additionally, both conforming and jumbo sub-indexes
fell by almost 9 percent each, with the conforming index declining to the
lowest reading since MBA’s series began in 2011. Credit continues to tighten
because of uncertainty still looming around the health of the job market, even
as other data on loan applications and home sales show a sharp rebound. A
further reduction in loan programs with low credit scores, high LTVs, and
reduced documentation requirements also continued to drive the overall decline
in credit availability.”

Added Kan, “Jumbo credit availability has fallen around 59 percent since
the pre-pandemic months, and data from MBA’s Weekly Applications Survey showed
that jumbo mortgage rates stayed over 30 basis points higher than conforming
rates in August, which is another indication of the reduced investor appetite
for those loans.”

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 2020-09-11 08:15:43

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Courtesy of Mortgage News Daily

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