Mortgage Credit Availability Declines Thanks to Fewer Terms over 30yrs

The Mortgage Bankers Association’s (MBA)rnMortgage Credit Availability Index (MCAI) indicates that lending standards tightenedrnslightly for the second consecutive month. rnThe index decreased 0.7 percent to 110.7 in September.  It had declined by a similar amount in Augustrnafter rising for the four previous months. rnMBA first publicly released the new index in June.</p

A decline in the MCAI indicates that lendingrnstandards are tightening.  MBA has been trackingrnthe loan accessibility data since early last year and benchmarked the index atrn100 in March 2012.  If MCAI had beenrnavailable in 2007, MBA estimates it would have been at roughly 800 because ofrnthe level and ease of available credit.  </p

MBA said the drop in September was<blargely caused by dwindling availability of loans with terms exceeding 30rnyears.  Shifting eligibility requirementsrnfor borrowers in jumbo loan programs largely offset each other and did notrnsignificantly affect the index.   </p

 “Creditrnavailability tightened last month as more lenders removed program offeringsrnwith loan terms greater than 30 years and/or interest-only features, similar tornthe trend we observed last month,” said Mike Fratantoni, MBA’s Vice Presidentrnof Research and Economics. “Just as before, we believe this reflects lendersrnimplementation of the Ability to Repay/Qualified Mortgage regulation whichrncomes fully into effect in January.  Offsetting this tightening has beenrnsome increased willingness to offer higher LTV loans, particularly to jumbornborrowers.”</p

The MCAI is calculated using factors related tornborrower eligibility such as credit score, loan type, loan-to-value ratios andrnthe underwriting criteria for more than 85 lenders and investors.  The index was developed by MBA in conjunctionrnwith AllRegs® and uses its Market Clarity® product.

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