Mortgage Credit Availability Rose in October
According to a new report from the Mortgage Bankers Association, mortgage credit availability increased in October, according to the organization’s Mortgage Credit Availability Index.
The report analyzed data from ICE Mortgage Technology.
According to the MBA, the MCAI rose by 0.4% to 107.5 in October. A decline in the MCAI indicates lending standards are tightening, while increases in the index are indicative of loosening credit, the MBA noted.
The index was benchmarked to 100 in March 2012. The Conventional MCAI increased 0.6%, while the Government MCAI increased by 0.1%, the MBA said.
Greater Availability
Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.8%, and the Conforming MCAI remained unchanged.
“Mortgage credit availability ticked up in October after two months of declines, with greater availability of conventional credit while the government segment remained flat over the month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “With current mortgage rates still elevated, lenders increased their offerings of ARM loans for lower LTV borrowers, including some that allow for cash-out refinancing. This also boosted the jumbo index, which was up to its highest level in three months.”
The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit, the MBA note.
The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). Those metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via ICE Mortgage Technology and a proprietary formula derived by MBA to calculate the MCAI, a summary measure that indicates the availability of mortgage credit at a point in time.
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