Mortgage Credit Availability Falls in October

Access to mortgage credit tightened in October, according to a report from the Mortgage Bankers Association (MBA).

The group's Mortgage Credit Availability Index (MCAI), a gauge of credit access based on borrower traits and underwriting trends, fell 2.5 percent last month to a reading of 113.2. The index was benchmarked to 100 in March 2012; at the height of the housing bubble, MBA says the index would have registered nearly 800.

MBA's chief economist, Mike Fratantoni, said the latest drop in credit availability stemmed from the ending of special loan programs pertaining only to REO sales.

"These programs were likely discontinued due to the shrinking level of REO properties for sale on the market," Fratantoni said.

Meanwhile, the Federal Housing Finance Agency (FHFA) recently started making a push to clarify repurchase requirements at Fannie Mae and Freddie Mac and to expand the acceptable range of loan-to-value ratios for mortgages purchased by the GSEs. While they have yet to be finalized, commentators hope those changes will help open up the credit box by easing lenders' fears of putback risks.

According to MBA, the component index measuring access to conventional mortgage loans fell significantly over the month, declining 5 percent to 80.9.

The index covering government loan programs also slipped, falling less than 1 percent to 246, the group reported.