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Mortgage Credit Availability Declined in December
The Mortgage Credit Availability Index (MCAI), a monthly report that measures the credit standards of lenders, declined 1.8 percent in December to 179.2 according to data released by the MBA on Tuesday. The dip was attributed to tightening lending standards and year-end adjustments by lenders to their menu of offerings. An increase in this index reflects loosening credit, the report said.
The MCAI is calculated using several factors related to borrower eligibility such as credit score, loan type, and loan-to-value ratio. It also includes three other indices, the conventional MCAI, government MCAI and jumbo MCAI, which are designed to show relative credit risk or availability for their respective index.
While the conventional MCAI, which fell 0.7 percent fared better than the government MCAI, which was down 2.6 percent, the component indices of the conventional MCAI both fell from the month prior with the conforming MCAI falling less (down 0.1 percent) than the Jumbo MCAI (down 1.4 percent).
However, the report indicated that despite the decline in the Jumbo credit availability over the month, the Jumbo index was up nearly 20 percent from December a year ago, by far the largest gain among the component indices.
“In December, a handful of investors made end of the year adjustments to their menu of offerings. This resulted in a net decrease in credit availability for government backed programs (FHA/VA/USDA), and especially for lower credit score, higher loan-to-value loans, as well as streamline (requiring less documentation) refinances,” said Lynn Fisher, MBA’s Vice President of Research and Economics.