97 Percent GSE Loans Boost Credit Availability

New initiatives aimed at increasing access to credit and making it morernaffordable began to pay off in January according to Mike Fratantoni, thernMortgage Bankers Association’s (MBA’s) Chief Economist.  MBA’s MortgagernCredit Availability Index (MCAI) increased 1.8 percent in January, torn117.8.  An increase in the index, whichrnanalyzes data from the AllRegs Market Clarity Product®, indicates that lendingrnstandards have loosened from those the previous month. </p

Fratantoni said, “Fannie Mae and Freddie Macrnannounced new 97 percent LTV loan programs in December aimed at expandingrnaccess to conventional financing for new and well-qualified homebuyer. Additionally,rnFHA announced reductions in mortgage insurance premiums (MIP).   Bothrnof these announcements were designed to provide consumers with better access tornmortgage credit.”</p

The MCAI has featured two components, thernConventional and the Government Mortgage Credit Availability Indices and thisrnmonth MBA added two more, one measuring access to jumbo and the other to conformingrnloans.  Fratantoni said that, “Growth inrnthe jumbo loan market over the last few years has been a consistent and ongoingrntrend – with evidence of expansion on both the supply and demand sides of thernmarket. These new component indices allow us to more precisely measure howrncredit availability is changing with regards to jumbo loan programs and theirrnconforming (non-jumbo) counterparts.”</p

All four of the components increased over thernmonth.  The Convention MCAI posted thernlargest increase at 3.1 percent and the Jumbo rose 1.9 percent.  The Conforming index increased by 1.8 percentrnand the Government index which gauges FHA, VA, and USDA loan programs was uprn0.9 percent.  </p

Fratantoni said that since the announcement of thernnew GSE programs in December roughly 40 percent of investors have begun tornoffer versions of the Fannie Mae loan which became available immediately andrnFreddie Mac’s which will be effective in March. rn”The conventional mortgage credit availability index increased threernpercent over the month as a result.  Although the FHA MIP reductions wentrninto effect January 26th, this initiative will be less likely to impact thernMCAI, as it impacts pricing rather than availability of government credit.</p

All four component indexes are constructed usingrnthe same methodology as the Total MCAI and have the same base levels, Marchrn2012=100. 

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