April Figures Show a 3.2 Percent Drop in Mortgage Credit Availability

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Mortgage credit availability decreased in April according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from ICE Mortgage Technology. The MCAI fell by 3.2% to 121.1 in April. 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 0.7%, while the Government MCAI decreased by 6.5%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.3%, and the Conforming MCAI rose by 1.2%.

“Mortgage credit availability fell for the second month in a row, as lenders reacted to the jump in mortgage rates over the past two months. With the rate/term refinance business drying up, lenders have reduced the availability of government streamline refinancing programs, which are no longer as relevant of an option for many borrowers,” comments Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“The conventional index slightly increased, as lenders added more ARM programs to help borrowers overcome higher rates and home prices,” states Kan. “The ARM share in MBA’s Weekly Applications Survey has also increased this year, but it is still low when compared to the mid-2000s. Furthermore, credit availability is much tighter than it was then, both in terms of credit requirements and the types of loans offered.”

“Jumbo lenders are somewhat loosening credit criteria, and jumbo rates have increased less than conforming rates this year, offering more opportunities for jumbo borrowers looking to purchase a home,” Kan concludes.

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