Mortgage Credit Availability Increased Slightly In July

Mortgage credit availability increased slightly in July, driven mainly by an increase in the number of jumbo adjustable-rate mortgage (ARM) programs, the Mortgage Bankers Association (MBA) reports.

The MBA's Mortgage Credit Availability Index (MCAI), which analyzes data from the AllRegs Market Clarity product, shows that mortgage credit increased about 0.5% to reach an index score of 116.4 in July, up from 115.8 in June.

A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012.Â

In addition to the rise in the number of jumbo ARM programs, increased availability of high-balance Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loan programs has also contributed to the net loosening of credit. Many investors have added 5/1, 7/1, 10/1 and, in some cases, 3/1 jumbo ARM programs in recent weeks.

What's more, there was a slight loosening in lender criteria for several programs with respect to minimum credit scores and maximum loan-to-value ratios, especially FHA and VA loans, the MBA reports.

Starting with this report, the MBA has added two measures of credit availability as part of the monthly MCAI report: The Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011.

These new indices, which can be considered separately or as part of the total index, are constructed using the same methodology and are designed to show relative credit risk/availability for conventional and government (FHA/VA/U.S. Department of Agriculture) loan programs. The difference between the component indices and the total MCAI is, first, the population of programs they examine and, second, the "base levels" to which they are calibrated.

Both have been benchmarked to March 2012.


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