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Mortgage Credit Availability Tightens Up

frozen-creditCredit availability in the mortgage industry declined in March due to administrative changes causing declines in the availability of conventional and super conforming loan programs.

The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA), which analyzes data from Ellie Mae's AllRegs Market Clarity business information tool, found that mortgage credit availability fell 0.2 percent to 123.5 in March.

"A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit," the report stated.

According to the MBA, the index was benchmarked to 100 in March 2012. Of the four component indices, the Government MCAI saw the greatest loosening (up 0.9 percent) over the month, while the Conventional MCAI saw the most tightening (down 1.6 percent). The Jumbo MCAI fell 0.2 percent, while the Conforming MCAI decreased 0.4 percent over the month.

"On net mortgage credit availability tightened very slightly in March. Administrative changes drove declines in the availability of conventional and super conforming loan programs, and those were partially offset by slightly relaxed lending standards on government lending programs which includes FHA, VA, and RHS," said Lynn Fisher, MBA's VP of Research and Economics.


Total Expanded Historical MCAI June 2015

Fannie Mae’s first quarter 2016 Mortgage Lender Sentiment Survey conducted in February confirmed MBA's data, reporting that fewer mortgage lenders are indicating that they are loosening credit standards, and many do not expect credit to become more accessible over the next few months.

The share of mortgage lenders reporting easing credit standards over the prior three months fell for the second straight quarter, according to the report. In addition, the survey also found that the share of lenders that expect credit standards to ease over the next three months decreased from last quarter for all mortgage types.

Fannie Mae reported that 13 percent of lenders surveyed noted that credit standards eased over the last three months in the first quarter of 2016, down from 17 percent in the previous quarter. Over the next three months, 13 percent of lenders said credit standards will ease, down from 18 percent last quarter. Five percent of lenders said that credit tightened over the last three months, up from 4 percent last quarter. Only 7 percent of lenders said credit will tighten over the next three months, the same as last quarter.

Doug Duncan, SVP and Chief Economist at Fannie Mae, explained, "Lender expectations for easing over the next three months have also moderated. Many lenders also indicate a likely increase in the sales of mortgage servicing rights, possibly to compensate for these countervailing pressures on profits and to take advantage of current favorable pricing in the market.”

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