While adjustable rate mortgages (ARMs) make up only a fraction of mortgage originations (just over 6 percent in the most recent Mortgage Bankers Association's (MBA's) volume summary), changes to some of their underwriting parameters were reflected in mortgage access numbers.



MBA's Mortgage Credit Availability Index (MCAI) increased by 0.3 percent in July to 179.0, driven by increased availability of conventional programs.  The Associations Vice President of Research and Economics, Lynn Fisher, explains, "Many agency eligible loan programs have been updated so that underwriting parameters for adjustable rate mortgages (ARMs) more closely align with their existing fixed rate counterparts. In many cases this means higher loan to value (LTV) ratios on existing ARMs loan programs, which exerted an upward pressure on the MCAI. This change affected conforming loan programs as well as agency jumbo programs, which focus on loans in high cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the GSEs."

Of the four component indices, the Jumbo MCAI saw the greatest increase in availability over the month (up 2.7 percent), followed by the Conventional MCAI (up 1.5 percent), and the Conforming MCAI (up 0.3 percent). The Government MCAI (down 0.6 percent) decreased from last month.

The MCAI analyzes data from Ellie Mae's AllRegs® Market Clarity® business information tool.  A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conforming and Jumbo indices have the same "base levels" as the Total MCAI, while the Conventional and Government indices have adjusted "base levels" calibrated to better represent where each index might fall in March 2012 relative to the Total=100 benchmark.