Credit Availability Falls as QM Date Draws Near

Lending tightened a bit in August as the mortgage market began making adjustments in preparation of the Consumer Financial Protection Bureau's (CFPB) qualified mortgage (QM) requirements set to go in effect January 2014.

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The ""Mortgage Bankers Association's"":http://mbaa.org/ (MBA) Mortgage Credit Availability Index (MCAI) decreased 0.7 percent month-over-month in August to a reading of 111.5--the first drop following four straight months of gains. The index was benchmarked at 100 in March 2012.

According to Mike Fratantoni, VP of research and economics for the association, August's decline was driven by decreases in availability of loans that have interest-only features and of loans with terms exceeding 30 years--two features that don't fit into the QM rule.

""As these loan features are outside of the qualified mortgage (QM) definition, these changes may reflect the beginning of QM implementation, and the fact that Fannie Mae and Freddie Mac are limited to acquiring loans that meet the QM definition,"" Fratantoni said.

At the same time, ""[s]hifting borrower eligibility requirements on jumbo loan programs led to offsetting increases and decreases to the MCAI,"" MBA noted.