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.