Mortgage Credit Decreases During August
Mortgage credit availability decreased in August according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from the AllRegs Market Clarity product. The MCAI decreased 0.7 percent to 111.5 in August, the first drop following four consecutive months of increases. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012 and if it had been tracked in 2007, would have been roughly 800. The decrease in the MCAI in August was driven by decreases in availability of loans that have an interest-only feature. In addition, lenders are in some cases dropping offerings for loans with terms greater than 30 years. Shifting borrower eligibility requirements on jumbo loan programs led to offsetting increases and decreases to the MCAI. “The slight decline in the MCAI in August reflected a reduction in the availability of certain loan features, particularly interest-only and terms exceeding 30 years. 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,” said Mike Fratantoni, MBA’s vice president of Research and Economics.