The Mortgage Bankers Association (MBA)
reported the first drop in its new Mortgage Credit Availability Index (MCAI) since
it became publicly available in June. The
index for August decreased 0.7 percent to 11.5, the first decline after four
consecutive months of increases. Negative
movement in the index signifies that lending standards are tightening.
The change, MBA said, was driven by
lessening availability of loans with an interest-only feature and some lenders
are dropping products that have loan terms that exceed 30 years. Shifting borrower eligibility requirements
for jumbo loans led to offsetting increases and decreases in the MCAI as well. MBA said some of the changes may have marked
early attempts to comply with Qualified Mortgage (QM) requirements that will
become effective after the first of next year.
While the MCAI for May 2013 was the
first one released by MBA the organization, paired with Allreg® publishing began
gathering data in early 2012. The index
was benchmarked to 100 in March 2012 and, as context, MBA said had the market
been tracked in 2007 the index would have been at roughly 800.
"The slight decline in the MCAI in August reflected a reduction in
the availability of certain loan features, particularly interest-only and terms
exceeding 30 years. As these loan features are outside of the qualified
mortgage (QM) definition, these changes may reflect the beginning of QM
implementation, and the fact that Fannie Mae and Freddie Mac are limited to acquiring
loans that meet the QM definition," said Mike Fratantoni, MBA's Vice President
of Research and Economics.