Mortgage credit availability decreased 2.4% in December to reach a score of 124.3 on the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI).
A decrease 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 MCAI includes four component indices for conventional, jumbo, conforming and government loans. In December, the Conventional MCAI saw the greatest tightening (down 4.8%) over the month followed by the Jumbo MCAI (down 4.2%), and the Government MCAI (down 0.6%). The Conforming MCAI increased 0.1% over the month.
In a release, Lynn Fisher, vice president of research and economics for the MBA, says the decrease in December was driven mainly ‘by a technical issue related to implementation of affordable low-down-payment loan programs.’
‘Many investors discontinued existing low down payment loan programs only to replace them with new iterations of similar programs that were discontinued,’ Fisher explains. ‘This introduced volatility into the December index reading and magnified the decline we saw over the month.
‘Conceptually the underwriting changes that caused these issues represent an expansion of the credit and are targeted at low-to-moderate income borrowers and first-time homebuyers,’ she adds. ‘A similar issue also caused changes to jumbo loan programs and had a tightening effect on the index while changes to government lending programs (Federal Housing Administration and Veterans Affairs) had an upward/loosening impact.’