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Mortgage Credit: Gaining Ground

A report from the Mortgage Bankers Association, which analyzes information based on several factors related to borrower eligibility from Ellie Mae’s AllRegs Market Clarity tool, revealed that mortgage credit loosened slightly in June.

The index was benchmarked to 100 in March 2012, when credit was especially tight. The Conforming and Jumbo indices were benchmarked as well. Meanwhile, the Conventional and Government indices have adjusted base levels to better represent where those indexes might have fallen in March 2012, relative to the benchmark.

Compared to tightening mortgage credit in May, the overall credit availability showed improvement in June with an increase of 0.1 percent to reach 178.5, as three of the four components in the MCAI gained ground.

A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit, according to the report.

“Credit availability slipped in May, primarily driven by investors consolidating their offerings for government insured loans,” said Lynn Fisher, MBA’s VP of Research and Economics. “These decreases were partially offset by the continued expansion of jumbo loan programs. The jumbo MCAI has increased in 13 of the last 15 months.”

However, what implemented decreases in May did the opposite for June. The report indicated that the increases in June are due to, “an expansion of jumbo loan programs and additional availability of affordable conforming loan programs," Fisher said.

Of the four indices, the Conforming and Conventional components of the MCAI each increased by 0.9 percent and the Jumbo MCAI rose 0.8 percent. However, these gains were offset by the Government index, which showed a decrease of 0.4 percent.

The methodology behind the data examines different factors that have 
been shown to influence a borrower’s ability or willingness to repay a loan. The main dimensions the Mortgage Credit Availability Index takes into consideration are credit scores, loan types, and loan-to-value ratio.

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