MBA: Mortgage Credit Loosened Slightly In February

Mortgage credit availability increased slightly in February, due mainly to an increase in the number of adjustable-rate mortgage (ARM) products being made available, according to the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI), which analyzes data from the AllRegs Market Clarity product.

Specifically, the MCAI increased 0.44% from an index score of 113.0 in January to 113.5 in February.

The index was benchmarked to 100 in March 2012. A decline in the MCAI indicates that lending standards are tightening, while increases indicate that credit is loosening. The MBA points out that if the MCAI had been tracked in 2007, it would have reached an index score of roughly 800, indicating that credit was much more available at that time.

‘For the third month in a row, mortgage lenders and investors slightly expanded credit offerings in February on net, as a result of offsetting factors,’ says Mike Fratantoni, chief economist for the MBA, in a release. ‘Specifically, the recently implemented qualified mortgage/ability to repay sections of the new Consumer Financial Protection Bureau regulations stipulate that ARM loans must qualify at the highest allowable rate for the first five years of the loan. As a result, many investors have discontinued loans whose interest rate adjusts after only three years (also known as 3/1 ARMs ). While there was significant pullback on these 3/1 programs, lenders and investors added several new 5-plus-year ARM programs, including those for jumbo loans, to their repertoire, resulting in a net increase to the MCAI.’


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