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 0.3 percentage points from 116.4 in July to 116.1 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. “While overall access to credit tightened in August, we did see some loosening in certain segments of the purchase market,” said Michael Fratantoni, MBA’s chief economist. “In particular, lenders instituted additional offerings of loan programs like the FHA 203(k) home improvement program and one-time-close programs for financing new construction.” The FHA 203(k) loan allows borrowers to include renovation expenses in their loan amount. One-time-close loans streamline the purchase and financing of new construction. Last month, MBA began reporting on two additional measures of credit availability as part of the monthly MCAI release: the Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011. The Conventional and Government MCAIs, which are component indices of the Total MCAI, are constructed using the same methodology and are designed to show relative credit risk/availability for conventional and government (FHA/VA/USDA) loan programs. The differences between the component indices and the total MCAI are first, the population of programs they examine, and second, the “base levels” to which they are calibrated. Using data from the MCAI and the Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark. Both the Conventional MCAI and Government MCAI decreased less than one percentage point. The Total MCAI has an expanded historical series which gives perspective on credit availability going back 10-years (expanded historical series does not include new Conventional or Government MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – this includes the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at six month intervals and extrapolated in the months between for charting purposes.