The availability of mortgage credit fell in January

WASHINGTON, DC (February 15, 2022) – The availability of mortgage credit declined in January according to the Mortgage Credit Availability Index (MCAI), a report by the Mortgage Bankers Association (MBA) which analyzes data from ICE Mortgage Technology.

The MCAI fell 0.9% to 124.8 in January. A drop in the MCAI indicates that lending standards are tightening, while increases in the index indicate an easing in credit. The index was benchmarked at 100 in March 2012. The conventional MCAI decreased by 2.5%, while the government MCAI increased by 0.7%. Among the conventional MCAI component indices, the MCAI Jumbo fell 1.6% and the Conforming MCAI fell 4.2%.

“Credit availability fell to its lowest level since August 2021, even as the economy and labor market continued to improve,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. . “The decline in credit supply came at a time when mortgage rates were rising and inventory was tight, adding to the challenges faced by some potential buyers. The supply of conforming mortgage credit fell to its lowest level since 2013, due to a drop in investor demand for loan programs aimed at borrowers with higher LTVs and lower credit rating profiles.”

Kan added: “Prior to last month, there were six months of increased jumbo credit supply, driven by strong demand, rapid house price appreciation and the overall strength of the economy. This growth streak ended last month as investors reduced their willingness to buy jumbo loans and also increased credit requirements.”

Source: Association of Mortgage Bankers; Powered by AllRegs® Market Clarity® by Ellie Mae

CONVENTIONAL, GOVERNMENTAL, COMPLIANT AND JUMBO MCAI COMPONENT INDICES
The MCAI fell 0.9% to 124.8 in January. The conventional MCAI decreased by 2.5%, while the government MCAI increased by 0.7%. Among the conventional MCAI component indices, the MCAI Jumbo fell 1.6% and the Conforming MCAI fell 4.2%.

Source: Association of Mortgage Bankers; Powered by AllRegs® Market Clarity® by Ellie Mae

The Conventional, Government, Compliant and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show the relative credit risk/availability for their respective index. The main difference between the total MCAI and the component indices is the population of loan programs they examine. The government MCAI reviews FHA/VA/USDA loan programs, while the conventional MCAI reviews non-government loan programs. Jumbo and Compliant MCAIs are a subset of Conventional MCAIs and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI reviews conventional programs outside the compliant loan limits, while the MCAI compliant reviews conventional loan programs that fall within the compliant loan limits.

The Conforming and Jumbo indices have the same “base levels” as the total MCAI (March 2012 = 100), while the conventional and government indices have adjusted “base levels” in March 2012. MBA calibrated the conventional indices and to better represent where each index could fall in March 2012 (the “Base Period”) relative to the Total=100 benchmark.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series that provides perspective on credit availability going back approximately 10 years (the expanded historical series does not include Conventional, Government, Compliant, or Jumbo MCAIs). The expanded historical series covers from 2004 to 2010 and was created to provide historical context to the current series by showing how the availability of credit has changed over the past 10 years – including the housing crisis and subsequent recession . Data prior to March 31, 2011 was generated using less frequent and less complete data measured at 6 month intervals and interpolated in the intervening months for charting purposes. The methodology of the extended historical series from 2004 to 2010 has not been updated.

Source: Association of Mortgage Bankers; Powered by AllRegs® Market Clarity® by Ellie Mae

Data prior to 31/03/2011 was generated using less frequent and less complete data measured at 6 month intervals interpolated in the intervening months for charting purposes.

ABOUT THE MORTGAGE CREDIT AVAILABILITY INDEX

The MCAI provides the only standardized quantitative index solely focused on mortgage credit.
The MCAI is calculated from several factors related to the eligibility of the borrower (credit score, type of loan, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available through the AllRegs® Market Clarity® product and a proprietary formula derived by MBA to calculate MCAI, a measure summary that indicates the availability of mortgage credit at a given time. The base period and total index values ​​are March 31, 2012 = 100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.

The MBA updated its methodology in August 2016 which produced an updated set of index values ​​(historically and going forward), for more information on this updated methodology please visit www .mba.org/MortgageCredit and read the FAQ and Methodology documents. Any historical data obtained prior to August 2016 is not comparable to the current revised index and should be replaced with the new historical.

For more information on the Mortgage Availability Index, including methodology, frequently asked questions and other helpful resources, please contact [email protected].

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