Jumbo/Conventional Mortgage Credit Leads November Improvement

Creditrnaccess increased in November, again primarily because of new jumbo loanrnproducts.  The Mortgage BankersrnAssociation (MBA) said its Mortgage Credit Availability (MCAI) Index rose 1.2rnpercent to 114.6.  A decline in the MCAI indicates that lending standards arerntightening, while increases in the index are indicative of a loosening ofrncredit.</p

“Credit availability increased in November, largely due to the additionrnof jumbo loan programs that permit cash-out refinancing,” said Mike Fratantoni,rnMBA’s Chief Economist.  “Home price appreciation and larger equityrncushions have likely made some lenders more willing to allow certain borrowersrnto take cash out, while still low mortgage rates may make this a morernattractive opportunity for some.”</p

MBA also measures the relative credit risk and available ofrnconventional mortgages and government backed by FHA, the VA, and USDA.  Both of these components of what MBA is nowrncalling the Total MCAI increased in November;  the Government component by less than onernpercent, rising from 246.0 to 247.0.  ThernConventional MCAI increased 2.7 percent to 84.1.</p

The Total MCAI and its components are constructed using the samernmethodology.  Factors related to borrowerrneligibility along with underwriting criteria for over 85 lenders and investorsrnare combined using data from the AllRegs® Market Clarity® product and arnproprietary formula derived by MBA.  MBArnsaid the differences between the component indices and the total MCAI arernfirst, the population of programs they examine, and second, the “base levels”rnto which they are calibrated.  Using data from the MCAI and the WeeklyrnApplications Survey, MBA calibrated the Conventional and Government indices tornbetter represent where each index might fall in March 2012 (the “basernperiod”).  The Total MCAI is benchmarkedrnat 100 for that date; the Convention MCAI at 69 and the Government component atrn222.

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