Mortgage Credit Availability Drops in September

Mortgage credit availability decreased in September 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 110.7 in September following a similar decline in August.  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. If it had been tracked in 2007, it would have been at a level of roughly 800, indicating the credit was much more available at that time. The decrease in the MCAI in September was driven by decreases in availability of loans that have a term greater than 30 years. Shifting borrower eligibility requirements on jumbo loan programs led to offsetting increases and decreases to the MCAI.    “Credit availability tightened last month as more lenders removed program offerings with loan terms greater than 30 years and/or interest-only features, similar to the trend we observed last month,” said Mike Fratantoni, MBA’s vice president of Research and Economics. Just as before, we believe this reflects lenders implementation of the Ability to Repay/Qualified Mortgage regulation which comes fully into effect in January.  Offsetting this tightening has been some increased willingness to offer higher LTV loans, particularly to jumbo borrowers.”