Mortgage Credit Availability Ticks Up Slightly In January

Mortgage credit availability increased in January as lenders modestly loosened underwriting standards, according to data released Tuesday by the Mortgage Bankers Association (MBA).

The MBA’s Mortgage Credit Availability Index (MCAI) rose 1.1% from December to a reading of 105.9, signaling slightly easier access to mortgage credit. The index is benchmarked to 100 in March 2012, with higher readings indicating looser lending standards.

Conventional loan availability drove most of the increase, rising 2.1% during the month. Availability of government-backed loans — which includes Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) programs — edged up 0.1%.

Within the conventional category, jumbo loan availability increased 2.9%, while conforming loan availability was unchanged.

“Mortgage credit availability increased in January, as lenders broadened their offerings of ARM loans, cash-out refinances, and loans on second homes. Most of these require lower LTV and higher credit scores,” said Joel Kan, MBA’s vice president and deputy chief economist.

“The beginning of the year is typically when lenders start to position themselves for the spring homebuying pick up, and recent dips in mortgage rates have provided windows of refinance opportunities, including refinances into ARM loans.”

“Jumbo credit availability expanded almost 3% over the month, with growth in the supply of both jumbo and non-QM loan programs,” Kan added.

The MCAI analyzes loan program data provided by ICE Mortgage Technology and is designed to track changes in lending standards over time. A declining index indicates tightening credit conditions, while increases reflect easing standards.

The MBA also publishes component indices to track specific segments of the market. The government index reflects FHA, VA and USDA programs, while the conventional index covers non-government loans. The jumbo and conforming indices are subsets of the conventional index, distinguishing between loans above and below conforming loan limits.