Mortgage credit availability increased in October according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.
The MCAI rose by 0.1% to 125.7 in October. 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 0.1%, while the Government MCAI remained essentially unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 4.1%, and the Conforming MCAI fell by 6%.
“Credit availability inched forward in October, but the overall index was 30 percent lower than February 2020 and close to the lowest supply of mortgage credit since 2014,” states Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Within the subindexes, a 4 percent increase in the jumbo index was essentially offset by a 6 percent drop in the conforming index. There was an increase in the supply of jumbo ARM and non-QM products, which drove most of the increase in the jumbo index.”
“On the conforming side, there was a pullback in ARMs, higher LTV loans and lower credit score products,” adds Kan. “While there is tightening in ARM credit availability both for jumbo and conforming loans, ARM loans have accounted for a small share of loan applications, ranging from 2.5 percent to 5 percent of applications to date in 2021. Tight credit availability, combined with ongoing supply and affordability challenges, are significant obstacles for some prospective first-time buyers.”
The MCAI rose by 1.5% to 125.6 in September. The Conventional MCAI increased 4.5%, while the Government MCAI decreased by 0.7%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 5.8%, and the Conforming MCAI rose by 2.6%.
Read the full report here.