Tight Lending Environment Now Quantifiable with New MBA Index

ThernMortgage Bankers Association (MBA) and AllRegs have released a newrnindex that is designed to capture how the availability of mortgagerncredit fluctuates from month the month. Current mortgagernunderwriting parameters will be fed into an algorithm which willrnproduce a single monthly index number, the MortgagernCredit Availability Index (MCAI), </p

Amongrnthe data factored into the index are those related to borrowerrneligibility (credit score, loan type, loan-to-value ratios, etc),rnunderwriting criteria for over 85 lenders and investors, and datarnfrom AllRegs Market Clarity® product. The result will be a summaryrnmeasure indicating the availability of mortgage credit at a point inrntime which MBA said it will be the only standardizedrnquantitative index that is solely focused on mortgage credit.  </p

ThernMCAI for May is 108.9 compared to 108.6 in April and both are up fromrnthe survey benchmark of 100 in March 2012. MBA and AllRegs have beenrntracking data for the index since 2011. To give the index somerncontext, MBA said that had it existed in 2007 the number would havernbeen roughly 800.</p

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Thernfollowing chart summarizes how mortgage credit availability hasrnchanged over past months as captured by the MCAI. Relative to thernbase period (March 2012), index values above 100 represent greaterrnavailability of mortgage credit while index values below 100 are anrnindication that mortgage lending standards have tightened.  ThernMay 2013 index value continues an upward trend and indicates thatrncredit is more available than it was in previous months.</p

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“Wernexpect that the MCAI will be a valuable new source of information forrnmarket participants, policymakers and researchers. For lenders, thernMCAI will provide an industry wide summary statistic regarding therntrend in mortgage credit availability. For policymakers, the MCAI canrnbe a helpful gauge regarding the impact of policy changes on thernavailability of mortgage credit. Finally, economists and otherrnresearchers may find the MCAI will provide a benefit in terms of itsrnability to capture credit trends, a vitally important component ofrnthe macroeconomic environment,” said Mike Fratantoni, MBA’s VicernPresident of Research and Economics.

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