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Mortgage Credit Loosens as Investors Step In

shutterstock_82245769Mortgage credit availability increased  0.8 percent to 182.4 in November, indicating loosening credit. The MBA’s Mortgage Credit Availability Index (MCAI) attributes this increase to a rise in investor offerings.

Analyzing data from Ellie Mae’s [1] AllRegs Market Clarity business information tool, the MCAI gauges mortgage credit availability in a given month and over time—the index was benchmarked to a rating of 100 in March 2012.

The MCAI tracks four component indices: Jumbo MCAI, Conventional MCAI, Government MCAI, and Conforming MCAI. The Government MCAI includes various government loan programs such as those from the Federal Housing Association [2] (FHA), U.S. Department of Veterans Affairs [3] (VA), and United States Department of Agriculture [4] (USDA). The other three indices track various non-governmental loans.

The Jumbo MCAI experienced the greatest increase in availability over the month—up 3.8 percent. Following suit was the 2.8 increase in the Conventional MCAI, and the 1.8 percent increase in the Conforming MCAI. Meanwhile, the Government MCAI decreased from last month—down 0.7 percent.

“Mortgage credit availability increased in November driven by a net increase in investor offerings. While the number of offerings for government backed programs (FHA/VA/USDA) declined modestly, conventional offerings increased more strongly over the month among both jumbo and conforming programs,” said Lynn Fisher, MBA’s VP of Research and Economics.

The report notes that 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 and availability for their respective index.

The MCAI takes into account factors such as credit score, loan type, and loan-to-value ratio. It is updated on a monthly basis.