Mortgage Credit Availability Loosened Slightly in October

Credit availability improved in October followingrntwo months in which the Mortgage Bankers Association’s (MBA) Mortgage CreditrnAvailability Index (MCAI) declined.   ThernMCAI increased 0.7 percent to 111.5 in October after declining by 0.7 percentrnin both August and September.</p

A decline in the index indicates that lending standards are tightening whilernincreases means credit is loosening.  Thernindex was benchmarked to 100 in March 2012 and MBA says that had it beenrnavailable in 2007 it would have measured creditrnavailability at roughly 800.</p

MBA said the loosened credit in October relativernto September can be partially explained because some investors reduced the minimumrncredit score of certain products.  At thernsame time, other investors reduced the availability of cash-out refinances andrnlimited other programs to primary residences in programs which previouslyrnallowed for second and investor homes.  The net impact was a slightrnincrease in the index for the month.</p

The MCAI is calculated usingrnseveral factors related to borrower eligibility (credit score, loan type,rnloan-to-value ratio, etc.).  These metrics and underwriting criteria forrnover 85 lenders/investors are combined by MBA using data made available via thernAllRegs® Market Clarity® product and a proprietary formula derived by MBA torncalculate the MCAI, a summary measure which indicates the availability of mortgagerncredit at a point in time.

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