The MCAI increased one percent to 115.7 in December.  A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit.  The index was benchmarked to 100 in March 2012. 

“In early December both Fannie Mae and Freddie Mac announced new 97 LTV loan programs aimed at expanding access to credit for new and well-qualified homebuyers, resulting in a loosening of credit over the month. The Conventional MCAI increased by 2.2 percent in December, while the Government MCAI increased less than one percent.” said Mike Fratantoni, MBA’s Chief Economist. “However, since only one of the two GSEs has gone live with their updates and the resulting investor pickup can be a delayed process, the impact of this announcement may take some time to fully quantify. Furthermore, Fannie Mae had been offering 97 LTV options until late October 2013 so this is really a reintroduction, not a new trend. In addition to these new high-LTV programs, investors continued to expand their product offerings for jumbo loans.”

Fannie Mae and Freddie Mac both announced their versions of the low-down-payment 97 LTV program on December 8^th, but only Fannie Mae’s went into effect immediately following the announcement on December 15^th. Since then, about one quarter of the investors in the MCAI data have started offering these new loan programs. Freddie Mac’s iteration will not go live until March of this year.

CONVENTIONAL AND GOVERNMENT COMPONENT INDICES

MBA now reports on two additional measures of credit availability as part of the monthly MCAI release: the Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011.

The Conventional and Government MCAIs, which are component indices of the Total MCAI, are constructed using the same methodology and are designed to show relative credit risk/availability for conventional and government (FHA/VA/USDA) loan programs.  The differences between the component indices and the total MCAI are first, the population of programs they examine, and second, the “base levels” to which they are calibrated.  Using data from the MCAI and the Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.

Both the Government MCAI and the Conventional MCAI increased in December.  The Government MCAI increased less than one percent – going from 247.0 to 247.7 – while the Conventional MCAI increased 2.2 percent from 83.1 to 84.9.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series which gives perspective on credit availability going back approximately 10-years (expanded historical series does not include new Conventional or Government MCAI).  The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – this includes the housing crisis and ensuing recession.  Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and extrapolated in the months between for charting purposes.

ABOUT THE MORTGAGE CREDIT AVAILABILITY INDEX

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit.

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).  These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via the AllRegs^® Market Clarity^® product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.  Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=69; Government March 31, 2012=222.