Credit availability improved in October following
two months in which the Mortgage Bankers Association's (MBA) Mortgage Credit
Availability Index (MCAI) declined. The
MCAI increased 0.7 percent to 111.5 in October after declining by 0.7 percent
in both August and September.
A decline in the index indicates that lending standards are tightening while
increases means credit is loosening. The
index was benchmarked to 100 in March 2012 and MBA says that had it been
available in 2007 it would have measured credit
availability at roughly 800.
MBA said the loosened credit in October relative
to September can be partially explained because some investors reduced the minimum
credit score of certain products. At the
same time, other investors reduced the availability of cash-out refinances and
limited other programs to primary residences in programs which previously
allowed for second and investor homes. The net impact was a slight
increase in the index for the month.
The MCAI is calculated using
several factors related to borrower eligibility (credit score, loan type,
loan-to-value ratio, etc.). These metrics and underwriting criteria for
over 85 lenders/investors are combined by MBA using data made available via the
AllRegs® Market Clarity® product and a proprietary formula derived by MBA to
calculate the MCAI, a summary measure which indicates the availability of mortgage
credit at a point in time.