The Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI) report showed mortgage credit availability increased in March. The MCAI is a report that analyzes data from Ellie Mae’s AllRegs Market clarity business information tool. A decline in the index indicates lending standards are tightening, while an increase indicates a loosening of credit.
“Credit availability inched higher in March, driven by the ongoing economic and job market recovery,” Joel Kan, MBA associate vice president of economic and industry forecasting, said in a release. “This has increased the amount of low credit score and high LTV [loan to value] products. All the market segments covered by our sub-indexes increased over the month, notably government and jumbo indexes.”
The total MCAI rose to 125.4 (0.6 percent) in March. The conventional MCAI, which examines non-government loan programs, increased 0.8 percent. The two subsets of the conventional MCAI, the jumbo MCAI and conforming MCAI, increased by 1.5 percent and 0.2 percent, respectively. The jumbo MCAI measures conventional programs outside the conforming loan limits, and the conforming MCAI measure those that are within the limits. The government MCAI, which examines FHA/VA/USDA loan programs, increased by 0.4 percent.
The indices 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. Each index is benchmarked to 100, set in March 2012.
“The government index, which includes FHA, VA, and RHS mortgages, increased for the sixth time in seven months to its highest level in a year,” Kan continued. “As we look ahead to the expected growth in the purchase market, which will be driven by millennials and first-time home buyers, credit availability to qualified borrowers will play an important role in supporting this demand.
“Jumbo credit supply increased for the sixth consecutive month, a strong rebound after many lenders pulled back in the first half of 2020 at the onset of the pandemic,” Kan said. “Jumbo availability is increasing again as the economy regains its footing and coincides with the strong demand for homebuying and accelerated home price growth in many markets.”