New GSE Loans only Minor Factor in Rising Credit Access

Accessibility to mortgage credit rose in December.  The Mortgage Bankers Association said todayrnthat its Mortgage Credit Availability Index (MCAI) went from the November levelrnof 114.6 to 115.7, a 1 percent gain.  Anrnincrease in the index, which was indexed to 100 in March 2012, indicates arnloosening of credit. </p

Although MBA said the conventional component of the MCAIrnincreased by 2.2 percent in December, indicating great availability ofrngovernment sponsored enterprise (GSE) loans, while the Government MCAI was uprnonly 1 percent.  This may not reflect tornany degree the new 97 percent loans announced last month by Fannie Mae andrnFreddie Mac.  Fannie Mae’s new loan,rnavailable to well qualified first-time homebuyers, went into effect immediatelyrnbut Freddie Mac’s version will not be available until March. </p

Mike Fratantoni, MBA’s Chief Economist said that, “Sincernonly one of the two GSEs has gone live with their updates and the resultingrninvestor pickup can be a delayed process, the impact of this announcement mayrntake some time to fully quantify. Furthermore, Fannie Mae had been offering 97rnLTV options until late October 2013 so this is really a reintroduction, not arnnew trend. In addition to these new high-LTV programs, investors continued tornexpand their product offerings for jumbo loans.”  Fratantoni said that about one quarter of therninvestors included in the MCAI data have started offering the low downpaymentrnloans. </p

The Total MCAI and its components are constructedrnusing factors related to borrower eligibility along with underwriting criteriarnfor over 85 lenders and investors.  Thesernare combined using data from the AllRegs® Market Clarity® product and arnproprietary formula derived by MBA.

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