Mortgage Credit Availability Rises in February

Mortgage credit availability increased slightly in February 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.  "For the third month in a row, mortgage lenders and investors slightly expanded credit offerings in February on net, as a result of offsetting factors,” said Mike Fratantoni, MBA’s Chief Economist. "Specifically, the recently implemented QM/ATR sections of the new CFPB regulations stipulate that ARM loans must qualify at the highest allowable rate for the first five years of the loan. As a result, many investors have discontinued loans whose interest rate adjusts after only three year (also known as 3/1 ARMS). While there was significant pull-back on these 3/1 programs, lenders and investors added several new five-plus year ARM programs, including those for Jumbo loans, to their repertoire resulting in a net increase to the MCAI.” The MCAI increased 0.44 percent from 113.0 in January to 113.5 in February. 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 the MCAI 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.