Mortgage Credit Availability Tightens as Higher LTV Options Expire

Mortgage credit was slightly less available inrnNovember than it was in October the Mortgage Bankers Association saidrntoday.  MBA’s new Mortgage CreditrnAvailability Index (MCAI) slipped from 111.5 to 110.2, a -1.2 percentrnchange.  Any decrease in the indexrnindicates that credit standards are tightening.</p

MBA said the index drop was occasioned byrndiscontinuance of a significant number of loan programs that had allowed forrnloan-to-value ratios exceeding 95 percent and low-to-mid range credit scorernminimums.  There was also a continuedrninvestor pull-back from programs offering longer than 30-year terms andrninterest only loans. Some of these changes were the result of preparations forrnnew regulations coming into effect in January. rnThe above changes were offset a bit by an increase in cash-outrnrefinancing programs offered to well-qualified borrowers by some investors. </p

MBA unveiled the MCAI earlier this year inrnconjunction with AllRegs and using their Market Clarity product.  The index is benchmarked to 100 in Marchrn2012.  It takes into account severalrnfactors related to borrower eligibility and the underwriting criteria from overrn85 lenders and investors.   By way of context, MBA says that had thernmarket been tracked by the index in 2007 it would have been at a level ofrnroughly 800 because of the easy availability of credit at that time.</p

The MCAI rose for four straight months after MBArnfirst went public with in late spring.  Itrnhas now retreated for a fourth consecutive month.

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