Mortgage credit availability remained stable in April, according to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI), analyzing data from Ellie Mae’s AllRegs Market Clarity business information tool. Although there was no change overall, there were some variances in specific credit areas.
A decline in the MCAI indicates that lending standards are tightening. Conversely, upticks in the index indicate loosening credit standards, according to an MBA press release. The index was benchmarked to 100 in March 2012.
“Credit availability in April was unchanged overall, but the components told different stories,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in the release. “Government credit tightened slightly as investors continued to pull back on streamline refinance products, while conventional credit availability increased, driven mainly by an expansion in jumbo credit. The jumbo market remains competitive for lenders according to data from our Weekly Application Survey, as the spread between conforming 30-year fixed-rate loans and jumbo 30-year fixed-rate loans widened to 12 basis points over March and April, the widest this spread has been since early 2016.”
The index shows an unchanged 177.9 MCAI in April, but reveals that there was a 1.9 percent increase in the Conventional MCAI increased and a 1.4 percent decline in the Government MCAI. A more intricate breakdown of the indices of the Conventional MCAI shows that the Jumbo MCAI rose by 4.4 percent and the Conforming MCAI dropped by 0.9 percent.
The Conventional, Government, Conforming and Jumbo MCAIs are constructed using the same methodology as the total MCAI, the release states. They each are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the component indices are the population of loan programs which they examine. The Government MCAI examines Federal Housing Administration (FHA)/Veterans Affairs (VA)/U.S. Department of Agriculture (USDA) loan programs and the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the Conventional MCAI and do not include FHA, VA or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits and the Conforming MCAI examines conventional loan programs categorized under conforming loan limits.
The MCAI also offers some historical context about how mortgage credit availability has changed over time.
“The total MCAI has an expanded historical series which gives perspective on credit availability going back approximately 10-years (expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI),” the release states. “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 6-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.”