MBA Says Mortgage Credit Availability Increased in July

WASHINGTON—Mortgage credit availability increased in July according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.

The MBA report released on Aug. 12 indicated that the MCAI rose by 0.3% to 119.1 in July. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased 0.8%, while the Government MCAI was unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 3.8%, and the Conforming MCAI fell by 3.2%.

Credit availability slightly increased in July, driven by an increase in jumbo loan programs. The overall gain was despite another month of pullbacks in high-LTV refinance programs due to GSE policy changes,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The elimination of more high-LTV refinance loans drove most of the 3% drop in the conforming index, but that was somewhat offset by lenders adding new refinance loan programs to help qualified, lower-income GSE borrowers. The bounce back in jumbo credit availability followed a sharp drop in June, as some investors renewed their interest in jumbo ARM loans for cash-out refinances and investment homes.”

Added Kan, “Even as the economic recovery is underway, overall credit supply has remained close to its lowest levels since 2014. Some borrowers are still in pandemic-related forbearance status, and servicers continue to work through possible resolutions for these borrowers.”

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.