Mortgage credit availability decreased in December, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.
The MCAI decreased 2.4 percent to 124.3 in December. 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.
Of the four component indices, the Conventional MCAI saw the greatest tightening (down 4.8 percent) over the month followed by the Jumbo MCAI (down 4.2 percent), and the Government MCAI (down 0.6 percent). The Conforming MCAI increased 0.1 percent over the month.
“However, this month, a large part of the decline was driven by a technical issue related to implementation of affordable, low downpayment, loan programs,” MBA Vice President of Research and Economics Lynn Fisher said in a news release. “Many investors discontinued existing low downpayment loan programs, only to replace them with new iterations of similar programs that were discontinued.
“This introduced volatility into the December index reading and magnified the decline we saw over the month. Conceptually the underwriting changes that caused these issues represent an expansion of the credit, and are targeted at low-to-moderate income borrowers and first-time homebuyers. A similar issue also caused changes to jumbo loan programs and had a tightening effect on the index while changes to government lending programs (FHA and VA) had an upward/loosening impact,” Fisher continued.
MBA now reports on five total measures of credit availability as part of the monthly MCAI release: the Total Mortgage Credit Availability Index, the Conventional Mortgage Credit Availability Index, the Government Mortgage Credit Availability Index, the Conforming Mortgage Credit Availability Index and the Jumbo Mortgage Credit Availability Index, with historical data back to 2011.