An index that analyzes the ease of obtaining a mortgage shows credit availability declined slightly in August as lenders start making adjustments to “qualified mortgage,” or QM, requirements imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Mortgage Credit Availability Index, a report introduced in June by the Mortgage Bankers Association, decreased 0.7 percent to 111.5 in August, the first drop following four consecutive months of increases.
The decrease was driven by decreases in availability of loans that have an interest-only feature, the MBA said. Also, lenders are in some cases dropping offerings for loans with terms greater than 30 years. Shifting borrower eligibility requirements on jumbo loan programs generated offsetting increases and decreases to the index.
A decline in the index indicates that lending standards are tightening, while increases indicate credit is loosening. The index was benchmarked to 100 in March 2012. If it had been in effect in 2007, it would have read about 800 then. Source: mbaa.org.