MBA: Offsetting Factors Led to Slight Improvement in Credit Access

Investors slightly expanded their loan offeringsrnand switched to longer-term products in response to new mortgage regulationsrnthe Mortgage Bankers Association (MBA) said today.  As a result, credit availability expanded slightlyrnin February.</p

MBA’s Mortgage Credit Availability Index (MCAI)rnincreased 0.44 percent from 113.0 in January to 113.5 in February.  This follows an increase of 1.85 percent inrnJanuary as the Consumer Financial Protection Agency’s (CFPB) Qualified Mortgagern(QM) and Ability to Repay (ATR) regulations went into effect. A decline in thernMCAI indicates that lending standards are tightening, while increases in the Indexrnare indicative of a loosening of credit. </p

MBA’s Chief EconomistrnMike Fratantoni said this was the third straight month that credit offeringsrnhad expanded slightly because of offsetting factors.  “Specifically, the recently implementedrnQM/ATR sections of the new CFPB regulations stipulate that ARM loans mustrnqualify at the highest allowable rate for the first five years of thernloan.  As a result, many investors have discontinued loans whose interestrnrate adjusts after only 3 year (also known as 3/1 ARMS).  While there wasrnsignificant pull-back on these 3/1 programs, lenders and investors addedrnseveral new 5+ year ARM programs, including those for Jumbo loans, to theirrnrepertoire resulting in a net increase to the MCAI.”</p

The MCAI was benchmarked to 100 in Marchrn2012.  MBA said that had the MCAI had been tracked in 2007, it would havernbeen at a level of roughly 800, indicating the credit was much more availablernat that time.  MBA produces the indexrnusing data from the AllRegs® Market Clarity® product.  

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