The Mortgage Bankers Association (MBA) reported an increase in mortgage credit availability in the month of July. The Jumbo Mortgage Credit Availability Index (MCAI) showed the biggest increase among the component indices over the course of a month.
The overall Mortgage Credit Availability Indexincreased by 0.3 percent last month. This brought the index up to 179.0. The increase in MCAI suggests that the lending standards are loosening. This increase was driven mainly by the increased availability of the conventional programs. This is according to MBA’s Research and Economics Vice President Lynn Fisher.
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Component Indices All Up, Except for Government MCAI
All component indices also went up except for one. The Government MCIA component index fell down 0.6 percent from a month earlier. The Conventional MCIA was up 1.5 percent. Similarly, the Conforming MCAI increased, it is up 0.3 percent from June. The largest increase among the four was the Jumbo MCAI which was up 2.7 percent.
The government MCAI looks at loan programs under the FHA, the VA, and the USDA. The Conventional MCAI studies non-government loans. The component indices show the credit availability or risks relative to each index.
“Many agency eligible loan programs have been updated so that underwriting parameters for adjustable rate mortgages (ARMs) more closely align with their existing fixed rate counterparts. In many cases, this means higher loan to value (LTV) ratios on existing ARMs loan programs, which exerted an upward pressure on the MCAI,” Vice President Lynn Fisher said. “This change affected conforming loan programs as well as agency jumbo programs, which focus on loans in high-cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the GSEs.”