Credit Access Takes a Hit as HARP Expires


Credit availability suffered an unusually large
in December.  The Mortgage
Bankers Association (MBA) said its Mortgage Credit Availability Index (MCAI)
fell 7.3 percent to 175.0 in December (it was 188.8 in November.)  A decline in the MCAI indicates that lending
standards are tightening.



The MCAI has two major components and the loss in
availability came entirely from the Conventional Index which decreased by 14.5
percent.  The Government MCAI inched up
by 0.1 percent.  The Conventional MCAI
itself has two components and both were down, the Jumbo MCAI by 14.9 percent
and the Conforming by 14.0 percent.

MBA’s Associate Vice President of Economic and
Industry Forecasting Joel Kan said. “The supply of credit dropped in December
to its lowest since February 2017. The decline was driven by a sharp decrease
in the conventional credit space, as we saw the expiration of the Home
Affordable Refinance Program
(HARP).  Credit
availability in government loans was stable over the month, ticking up
slightly. We also saw a decline in high balance and super conforming programs,
which drove the decline in the jumbo index.”

The MCAI is calculated using several factors related to borrower
eligibility (credit score, loan type, loan-to-value ratio, etc.) gathered from
over 95 lenders and investors. They are combined with data from an AllRegs
proprietary product to calculate a summary measure indicating the availability
of mortgage credit at a point in time

The MCAI and its components are designed to show
relative credit risk/availability for their respective indices and were
benchmarked in March 2012. The total MCAI, Conforming, and Jumbo indices were indexed
at 100 while the Conventional and Government indices were indexed at 73.5 and
183.5 respectively to better represent where each index might have been
relative to 100.

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