Although some investors are still holding tight to credit standards, mortgage credit availability loosened last month, according to a recent Mortgage Bankers Association report.
Analyzing data from Ellie Mae’s AllRegs Market Clarity business information tool, the MBA concluded that the Mortgage Credit Availability Index (MCAI) increased 0.5 percent to 122 in April.
The MCAI is a summary measure that indicates the availability of mortgage credit at a point in time. 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.
Of the index’s four components, the Government MCAI saw the greatest easing and was up 1.1 percent over the month. Following that index was the Jumbo MCAI with an increase of 0.8 percent and the Conforming MCAI with an increase of 0.2 percent. The Conventional MCAI decreased 0.6 percent.
“Mortgage credit availability increased on net in April,” said MBA Chief Economist Mike Fratantoni. “The increase was driven by new offerings of FHA’s 203(k) home improvement program, new VA offerings and new jumbo products. The increase was partially offset by some investors tightening underwriting criteria on conventional cash out offerings.”
The MCAI is calculated using several factors related to borrower eligibility, such as credit score, loan type and loan-to-value ratio. These metrics and underwriting criteria for more than 95 lenders and investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA.