An MBA exec said higher availability of conventional programs drove the increase
An index of mortgage credit availability saw a slight uptick in July, signaling a loosening of credit, according to the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Credit Availability Index (MCAI) rose 0.3% to 179.0 during the month. The index analyzes data from Ellie Mae’s AllRegs Market Clarity tool. A decline in the index would indicate tightening lending standards.
Three of the MCAI’s four component indices posted increases over the month. The jumbo MCAI saw the biggest increase in availability with a 2.7% gain. The conventional MCAI grew 1.5% during the month, while the conforming MCAI climbed 0.3%. The government MCAI saw the only drop in July, with a decrease of 0.6%.
"Mortgage credit availability increased slightly in July, driven by increased availability of conventional programs," said Lynn Fisher, MBA's vice president of research and economics. "Many agency-eligible loan programs have been updated so that underwriting parameters for adjustable-rate mortgages (ARMs) more closely align with their existing fixed rate counterparts. In many cases this means higher loan-to-value (LTV) ratios on existing ARMs loan programs, which exerted an upward pressure on the MCAI. This change affected conforming loan programs as well as agency jumbo programs, which focus on loans in high-cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the GSEs."
The Urban Institute’s Housing Finance Policy Center (HFPC) said in July that its mortgage credit availability index rose to 5.4 during the first quarter – its highest level since 2016 – from the prior quarter. The HFPC also said there remains “significant space” to safely expand the credit box.
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The MBA’s Mortgage Credit Availability Index (MCAI) rose 0.3% to 179.0 during the month. The index analyzes data from Ellie Mae’s AllRegs Market Clarity tool. A decline in the index would indicate tightening lending standards.
Three of the MCAI’s four component indices posted increases over the month. The jumbo MCAI saw the biggest increase in availability with a 2.7% gain. The conventional MCAI grew 1.5% during the month, while the conforming MCAI climbed 0.3%. The government MCAI saw the only drop in July, with a decrease of 0.6%.
"Mortgage credit availability increased slightly in July, driven by increased availability of conventional programs," said Lynn Fisher, MBA's vice president of research and economics. "Many agency-eligible loan programs have been updated so that underwriting parameters for adjustable-rate mortgages (ARMs) more closely align with their existing fixed rate counterparts. In many cases this means higher loan-to-value (LTV) ratios on existing ARMs loan programs, which exerted an upward pressure on the MCAI. This change affected conforming loan programs as well as agency jumbo programs, which focus on loans in high-cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the GSEs."
The Urban Institute’s Housing Finance Policy Center (HFPC) said in July that its mortgage credit availability index rose to 5.4 during the first quarter – its highest level since 2016 – from the prior quarter. The HFPC also said there remains “significant space” to safely expand the credit box.
Related stories:
Mortgage credit availability loosens in February
Mortgage credit availability at highest level since 2016
