Mortgage credit availability increased by 2.1 percent to 182.9 points in January according to the Mortgage Credit Availability Index (MCAI) data released on Tuesday.
The MCAI, a report from the MBA, analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool and an increase in the data indicates loosening credit while a decline indicates tightening lending standards.
The MCAI is calculated using several factors related to borrower eligibility such as credit score, loan type, loan-to-value ratio, etc. These metrics and underwriting criteria for over 95 lenders/investors are combined to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.
The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs.
According to the data, Conventional MCAI rose 3.6 percent and was more than the Government MCAI which increased by 0.9 percent in January.
Jumbo MCAI and Conforming MCAI are components of the Conventional MCAI. While Jumbo MCAI examines conventional programs outside conforming loan limits, the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.
The component indices of the Conventional MCAI increased from the prior month with Jumbo MCAI making the most gains, rising 6.1 percent, driven by an increase in the number of programs with reduced documentation requirements for Jumbo credits. In contrast, the indices on the Conforming MCAI were up 1.1 percent.
“Credit availability increased across the board in January, more than reversing December declines in almost all component indices. Jumbo credit programs rebounded most strongly and reached a new series high, driven by an increase in the number of programs with reduced documentation requirements,” said Lynn Fisher, VP, Research and Economics at MBA.