Mortgage credit availability did little to crawl back to pre-pandemic levels last month. The Mortgage Bankers Association said its Mortgage Credit Availability Index (MCAI) inched up only 0.1 percent in October to 125.7. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. Two of the MCAI's component index were flat while the remaining two did make large and offsetting changes.
The Conventional MCAI increased 0.1 percent, while the Government MCAI was unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 4.1 percent, and the Conforming MCAI fell by 6.0 percent.
"Credit availability inched forward in October, but the overall index was 30 percent lower than February 2020 and close to the lowest supply of mortgage credit since 2014," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Within the subindexes, a 4 percent increase in the jumbo index was essentially offset by a 6 percent drop in the conforming index. There was an increase in the supply of jumbo ARM and non-QM products, which drove most of the increase in the jumbo index. On the conforming side, there was a pullback in ARMs, higher LTV loans, and lower credit score products. While there is tightening in ARM credit availability both for jumbo and conforming loans, ARM loans have accounted for a small share of loan applications, ranging from 2.5 percent to 5 percent of applications to date in 2021."
MCAI components are calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via a proprietary product from Ellie Mae. The resulting calculations are summary measures which indicate the availability of mortgage credit at a point in time. Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.