Lending standards tightened in December, according to data from the MBA's mortgage credit availability index (MCAI). The index, which analyzes mortgage data from Ellie Mae's AllRegs Market Clarity business information tool, decreased 7.3 percent to 175 during the month. Breaking down the index into various components, the data indicated that the conventional MCAI decreased 14.5 percent while the government MCAI increased slightly by 0.1 percent.
The latest data indicated that in December 2018, the supply of credit dropped to its lowest since February 2017. One of the key factors that drove the decrease in credit supply was the expiration of the Home Affordable Refinance Program (HARP) that ended during the month. According to Joel Kan, AVP of Economic and Industry Forecasting at the MBA, "Credit availability in government loans remained stable over the month ticking up slightly. We also saw a decline in high balance and super conforming programs which drove the decline in the jumbo index."
Of the component indices on the MCAI's conventional loan index, Jumbo MCAI decreased by 14.9 percent, while the Conforming MCAI decreased by 14 percent.
The primary difference between the total MCAI and the Component Indices are the population of loan programs examined by these indices. While the Government MCAI examines FHA, VA, and USDA loan programs, the Conventional MCAI examines non-government loan programs. On the other hand, the Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.
The slight uptick in government loans in December was a change from November 2018, where government loans were the only ones showing a decline. In fact, the MCAI data had indicated that government loans had been on a steadily downward slope since the spring of 2017.
To read the November data click here.