New initiatives aimed at increasing access to credit and making it more
affordable began to pay off in January according to Mike Fratantoni, the
Mortgage Bankers Association's (MBA's) Chief Economist. MBA's Mortgage
Credit Availability Index (MCAI) increased 1.8 percent in January, to
117.8. An increase in the index, which
analyzes data from the AllRegs Market Clarity Product®, indicates that lending
standards have loosened from those the previous month.
Fratantoni said, "Fannie Mae and Freddie Mac
announced new 97 percent LTV loan programs in December aimed at expanding
access to conventional financing for new and well-qualified homebuyer. Additionally,
FHA announced reductions in mortgage insurance premiums (MIP). Both
of these announcements were designed to provide consumers with better access to
mortgage credit."
The MCAI has featured two components, the
Conventional and the Government Mortgage Credit Availability Indices and this
month MBA added two more, one measuring access to jumbo and the other to conforming
loans. Fratantoni said that, "Growth in
the jumbo loan market over the last few years has been a consistent and ongoing
trend - with evidence of expansion on both the supply and demand sides of the
market. These new component indices allow us to more precisely measure how
credit availability is changing with regards to jumbo loan programs and their
conforming (non-jumbo) counterparts."
All four of the components increased over the
month. The Convention MCAI posted the
largest increase at 3.1 percent and the Jumbo rose 1.9 percent. The Conforming index increased by 1.8 percent
and the Government index which gauges FHA, VA, and USDA loan programs was up
0.9 percent.
Fratantoni said that since the announcement of the
new GSE programs in December roughly 40 percent of investors have begun to
offer versions of the Fannie Mae loan which became available immediately and
Freddie Mac's which will be effective in March.
"The conventional mortgage credit availability index increased three
percent over the month as a result. Although the FHA MIP reductions went
into effect January 26th, this initiative will be less likely to impact the
MCAI, as it impacts pricing rather than availability of government credit.
All four component indexes are constructed using
the same methodology as the Total MCAI and have the same base levels, March
2012=100.