Tentative Recovery in Mortgage Availability With Help From Government and Jumbo Loans
While it did dip a bit last month,
the availability of mortgage credit appears to be stabilizing, having moved
only slightly over the last three months. The Mortgage Bankers Association’s
(MBA’s) Mortgage Credit Availability Index (MCAI) was down 0.1 percent in
December, to a reading of 122.1. A decline in the MCAI indicates that lending
standards are tightening, while increases in the index are indicative of
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 hesitant recovery.
The index has four components based
on loan types. The Conventional MCAI decreased 2.8 percent in December while
the Government MCAI increased by 2.1 percent. Of the component indices of the
Conventional MCAI, the Jumbo MCAI increased by 1.4 percent, and the Conforming
MCAI fell by 7.2 percent.
“Credit availability in
December remained essentially unchanged, with an increase in government credit
offset by a decrease in conventional credit,” said Joel Kan, MBA’s
Associate Vice President of Economic and Industry Forecasting. “The
decline in conventional credit availability was the first in three months and
was driven by fewer ARM offerings. ARM loans have increasingly seen a smaller
share of the market, given the historically low rates for fixed-rate mortgages.
Availability for government loans and jumbo loans have increased for four
months and three months in a row, respectively.”
Added Kan, “The increased
credit supply for jumbo loans and government loans, driven in part by the
greater supply of lower credit score and higher LTV loans, will support
first-time home buyers entering the market. This will also help to facilitate
sustained purchase activity for what is expected to be a strong 2021 for the
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.