Mortgage Bankers Association

12 December 2013

Higher Index=More Credit Available
Lower Index=Less Credit Available

Mortgage credit availability increased slightly in October, according to the Mortgage Credit Availability Index (MCAI), an MBA report which analyzes data from the AllRegs® Market Clarity® product.

The MCAI decreased 1.2 percent from 111.5 in October to 110.2 in November. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012. If it had been tracked in 2007, it would have been at a level of roughly 800, indicating the credit was much more available at that time.

A significant number of loan programs allowing for more than 95 LTV and low-to-mid range minimum FICOs were either discontinued in November, or transitioned into programs with lower LTV maximums and/or higher minimum credit scores. Investor pull-back from programs with greater than 30-year terms and interest-only programs continued as the industry prepares for new regulations coming into effect in January 2014.

Some decreases to the index were offset by investors increasing their cash-out offerings to well-qualified borrowers.

MBA has partnered with AllRegs® to produce monthly MCAI, which feeds current mortgage underwriting parameters into a single index number to capture whether overall mortgage credit is more or less available from month to month.

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit.