A recent uptick in adjustable-rate mortgage (ARM) products helped boost mortgage credit availability overall in August, according to a report published by the Mortgage Bankers Association (MBA). MBA Deputy Chief Economist Joel Kan said industry lending capacity appears to have stabilized after significant declines in recent years.
MBA saw a 0.1 percent increase to 104 in August, according to the Mortgage Credit Availability Index (MCAI), calculated using data from ICE Mortgage Technology, according to an MBA press release. The index was benchmarked at 100 in March 2012.
“Mortgage credit availability increased slightly in August, driven by a small increase in ARM product offerings, which was similar to what we saw in July,” MBA Vice President and Deputy Chief Economist Joel Kan said in the release. “With mortgage rates declining, and some renewed application activity for both purchases and refinances, the demand for ARM loans has increased somewhat, although the overall level of ARM applications remains close to historically low levels.”
Kan observed that industry capacity has seemingly stabilized as companies have adjusted to a lower volume environment. Combined with recent economic uncertainty, those factors continue to keep credit supply relatively low.
The MCAI comprises data from other indices related to specific loan categories, constructed using the same methodology as the Total MCAI. The main difference between the Total MCAI and the component indices are the population of loan programs they examine.
For example, the Conventional MCAI rose 0.3 percent in August, while the Government MCAI decreased by 0.1 percent. The Government MCAI examines loans offered through the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA).
Of the component indices comprising the Conventional MCAI, the Jumbo MCAI remained unchanged and the Conforming MCAI jumped by 0.7 percent.