The Mortgage Credit Availability Index (MCAI) decreased 0.8 percent to 182.1 in September, as shown in a recent report by the Mortgage Bankers Association (MBA). The index—which collates data pulled from a business tool provided by Ellie Mae’s All Regs Market Clarity—is calculated by analyzing borrower eligibility in terms of credit scores, loan types, and loan-to-type ratios. The report showed a decline in MCAI overall, suggesting credit availability for mortgages dropped during the month.
But the MBA report allows for a deeper exploration and understanding of market trends, seeing as how the Total MCAI is divided into subsequent indices regarding different types of loans. Whereas credit availability for conventional loans increased by 1.2 percent and credit availability for jumbo loans increased 2.7 percent, the index overall was brought down by a decline in government loans specifically. This reflects a decline in streamlined offerings and government programs with more lenient credit requirements. In fact, this is the lowest the Government MCAI—the index examining loans originating with the Federal Housing Administration, the Veterans Administration, and the U.S. Department of Agriculture—has fallen since July 2015.
This data would suggest that, whereas the availability of mortgage credit for those in pricier markets continues to increase—this is the fifth increase in the Jumbo MCAI in the last six months, and the highest level the Jumbo MCAI has reached since the MBA began tracking jumbo loans specifically—credit availability is tightening for lower-income borrowers. This conclusion also is reflected in the 0.7 percent drop in the Conforming MCAI.
While the Conventional MCAI and Government MCAI were recalibrated in March 2012 relative to the overall index, the Conforming and Jumbo MCAIs are calculated with the same base levels as the Total MCAI. The Total MCAI also has an expanded historical series that opens a window back 10 years, and it can even be expanded back to 2004—allowing for a perspective that includes the effects of the last housing crisis and the following recession.