The Mortgage Bankers Association's (MBA)
Mortgage Credit Availability Index (MCAI) indicates that lending standards tightened
slightly for the second consecutive month.
The index decreased 0.7 percent to 110.7 in September. It had declined by a similar amount in August
after rising for the four previous months.
MBA first publicly released the new index in June.
A decline in the MCAI indicates that lending
standards are tightening. MBA has been tracking
the loan accessibility data since early last year and benchmarked the index at
100 in March 2012. If MCAI had been
available in 2007, MBA estimates it would have been at roughly 800 because of
the level and ease of available credit.
MBA said the drop in September was
largely caused by dwindling availability of loans with terms exceeding 30
years. Shifting eligibility requirements
for borrowers in jumbo loan programs largely offset each other and did not
significantly affect the index.
availability tightened last month as more lenders removed program offerings
with loan terms greater than 30 years and/or interest-only features, similar to
the trend we observed last month," said Mike Fratantoni, MBA's Vice President
of Research and Economics. "Just as before, we believe this reflects lenders
implementation of the Ability to Repay/Qualified Mortgage regulation which
comes fully into effect in January. Offsetting this tightening has been
some increased willingness to offer higher LTV loans, particularly to jumbo
The MCAI is calculated using factors related to
borrower eligibility such as credit score, loan type, loan-to-value ratios and
the underwriting criteria for more than 85 lenders and investors. The index was developed by MBA in conjunction
with AllRegs® and uses its Market Clarity® product.