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A Jumbo Movement in Mortgage Availability

Mortgage credit availability increased in March led mostly by an increase in jumbo mortgage loan offerings. This, according to the latest data from the MBA's Mortgage Credit Availability Index (MCAI).

The monthly index analyzes data from the Ellie AllRegs Market Clarity business information tool to provide standardized quantitative data on the availability of mortgage credit. A decline in MCAI indicates that lending standards are tightening whereas an increase points to loosening lending standards.

In March, the MCAI rose 1.1 percent to 182.1. However, the largest movement on the index was seen in Jumbo mortgage sub-index that rose 5.2 percent, the highest it has reached in the four months since November 2018.

"Credit availability increased in March, primarily due to a spike in jumbo mortgage offerings. The jumbo sub-index increased 5 percent and reached its highest level since last November, as the recent decline in mortgage rates led to a jump in refinances from borrowers with larger loans," said Joel Kan, AVP of Economic and Industry Forecasting at MBA.

According to the data, conventional MCAI increased 3.6 percent, while the Government MCAI declined 1.2 percent. Apart from the Jumbo MCAI,   Conforming MCAI increased by 1.4 percent.

On the other hand, the index saw a decline in government loans in March. The government MCAI dipped 1.2 percent during the month. "The credit supply for government loans decreased in March, as investors continue to reduce FHA and VA streamline refi offerings," Kan explained.

According to the data 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 primary difference between the total MCAI and the component indices are the population of loan programs which they examine. While the government MCAI examines FHA/VA/USDA loan programs,  the conventional MCAI examines non-government loan programs.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and editor. A former Online Editor and currently a reporter for MReport, she is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.
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