MBA Fine-Tunes Credit Access Index

News

The Mortgage Bankers
Association (MBA) reported that its Mortgage Credit Availability Index
increased by one point in July, and announced that its methodology for
constructing the index had changed. An increase in the index, which analyzes
data from Ellie Mae’s AllRegs® tool and MBA’s survey of lenders, indicates that
lending standards have eased.

The index, which was
benchmarked to 100 in March 2012, increased to 164.3. Of the four component
indices, the Jumbo and Government MCAIs saw the greatest increase in
availability (both up 1.3 percent) over the month followed by the Conventional
MCAI (up 0.7 percent), and the Conforming MCAI (up 0.1 percent).

 

 

The
change in methodology has raised the relative values of the MCAI.  For example, the index level for June as
reported under the old index was 119.8.  The change increased that value to 163.3

Lynn Fisher, MBA’s Vice
President of Research and Economics said “In the three years since its
inception, we have been monitoring the MCAI, always looking for opportunities
to improve the series and provide a more accurate gauge of credit availability.
We expanded our historical series to cover over 10 years of historical data,
and followed that with the introduction of four MCAI sub-indices (Conventional,
Government, Conforming, and Jumbo) to help users better understand what is
driving changes in the overall MCAI.

“Today we are excited to
announce an updated methodology that responds more effectively to changes in
the marketplace and better accounts for the frequent addition and subtraction
of investor offerings,” he said.  “While
using the exact same data, this updated methodology does a better job of
reflecting new loan programs that did not exist in the base month of the index.
In addition we are redefining our conforming and jumbo indices to be restricted
to conventional loan programs only. Previously, conforming and jumbo status was
determined solely by loan size.  In the new methodology, high balance FHA
and VA loan programs are not included in the jumbo category.”

Fisher explained, “The
main difference with this change is that the prior methodology had shown a
tightening of credit over the past few months.  The new methodology shows
a modest loosening of credit availability over this time period, in line with
other indicators of credit availability. This is a result of new jumbo loan
offerings that did not exist in our 2012 base period becoming more popular and
prevalent in recent periods. Our new methodology captures the addition of these
new loan offerings more effectively and better aligns with anecdotal evidence
of loosening credit conditions over the last seven months.”

“The overall credit
availability increase in July was driven by an uptick in programs that allow
for refinancing among relatively lower credit score borrowers. We observed this
trend in both the conventional and government programs.”

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