Mortgage credit availability drops in November

The availability of mortgage credit dropped in November, according to the most recent Mortgage Credit Availability Index (MCAI), produced by the Mortgage Bankers Association (MBA).

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Specifically, the MCAI fell by 1.7 percent in November to 96.5. This decline indicates that lending standards are tightening, as opposed to increases in the index, which are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

Breaking down the numbers, the Conventional MCAI decreased 3.6 percent, while the Government MCAI remained unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 5.4 percent, and the Conforming MCAI remained unchanged.

“Credit availability in November declined to its lowest level in four months, driven by reduced offerings of non-QM and jumbo loan programs,” Joel Kan, MBA’s vice president and deputy chief economist, said. “The conforming and government indices were unchanged over the month but remained close to multi-year lows. Overall credit availability was seven percent below last year’s level, as the industry has reduced capacity in response to declining origination volume and lenders continuing to simplify their loan offerings.”

The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI looks at non-government loan programs.

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. It is calculated using several factors related to borrower eligibility, including credit score, loan type, loan-to-value ratio, and others. These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via ICE Mortgage Technology and a proprietary formula derived by MBA to calculate the MCAI.