Mortgage Credit Availability Rises 1.1% To 107.1 In February

Mortgage credit availability rose by 1.1% to 107.1 in February, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from ICE Mortgage Technology.

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 2.7%, while the Government MCAI, which includes Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) programs, decreased by 0.8%.

Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 2.9%, and the Conforming MCAI rose by 2.0%.

“Lenders increased mortgage credit supply last month, particularly for refinancing, as mortgage rates moved lower in January and February. Most of last month’s supply growth was in loan programs that allowed for cash-out refinance and on investor homes, although these were still limited to lower LTV borrowers,” said Joel Kan, MBA’s vice president and deputy chief economist.

Kan continued, “The jumbo index increased by 3% for the second straight month, again driven by growth in non-QM loan programs. The government index was the only component that saw a decline in credit supply over the month, as lenders likely tightened underwriting standards given the recent increase in FHA mortgage delinquency rates.”

The MCAI measures mortgage credit availability using borrower eligibility factors such as credit score, loan type and loan-to-value ratio. It is calculated by MBA using underwriting criteria from more than 95 lenders and investors, with data provided by ICE Mortgage Technology.

The base levels are set at March 31, 2012, with the total index at 100, the Conventional index at 73.5 and the Government index at 183.5.