Mortgage Credit Availability Increased In April

Mortgage credit availability increased in April 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 MCAI rose by 2.2 percent to 128.1 in April. 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 4.8 percent, while the Government MCAI increased by 0.1 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.9 percent, and the Conforming MCAI rose by 12.6 percent.

“Credit availability rose in April, fueled by a 5 percent increase in conventional mortgage credit, as well as an expansion in agency programs for ARMs and high-balance loans. The conforming and jumbo loan indices jumped 7 percent and 13 percent, respectively. The uptick in credit supply comes as the housing market and economy continue to strengthen,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “One trend that has developed in recent months is the rising demand for ARMs, driven by higher rates for fixed mortgages and faster home-price appreciation.”  

Added Kan, “Despite this month’s increase, mortgage credit supply has not returned to pre-pandemic levels, given the over 2 million loans still in forbearance.” 

Source: Mortgage Bankers Association; Powered by Ellie Mae’s AllRegs® Market Clarity®  

CONVENTIONAL, GOVERNMENT, CONFORMING, AND JUMBO MCAI COMPONENT INDICES 

The MCAI rose by 2.2 percent to 128.1 in April. The Conventional MCAI increased 4.8 percent, while the Government MCAI increased by 0.1 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.9 percent, and the Conforming MCAI rose by 12.6 percent. 

Source: Mortgage Bankers Association; Powered by Ellie Mae’s AllRegs® Market Clarity®

The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.

The Conforming and Jumbo indices have the same “base levels” as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted “base levels” in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series that gives perspective on credit availability going back approximately 10-years (expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – including the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.