Credit Availability Tightens as Lenders Limit Offerings

After experiencing a small bump in October, mortgage credit availability reversed course in November as lenders ceased offering certain easy-credit products.

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The ""Mortgage Bankers Association's"":http://www.mortgagebankers.org/default.htm (MBA) Mortgage Credit Availability Index (MCAI) slipped 1.2 percent to settle at 110.2 in November, wiping out the 0.7 percent gain recorded a month prior. A decline in the index indicates that lending standards are tightening; the index was benchmarked to 100 in March 2012.

According to MBA, the drop comes from the discontinuation of a ""significant number"" of loan programs for loan-to-value ratios of more than 95 percent and programs for borrowers with low-to-mid range FICO scores. Investors also continued to pull back from products featuring terms longer than 30 years and interest-only programs as the mortgage industry prepares for the arrival of January's new regulations.

Those decreases were partly offset by investors increasing cash-out offerings to well-qualified borrowers, MBA reported.