Credit access increased in November, again primarily because of new jumbo loan products. The Mortgage Bankers Association (MBA) said its Mortgage Credit Availability (MCAI) Index rose 1.2 percent to 114.6. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit.
"Credit availability increased in November, largely due to the addition of jumbo loan programs that permit cash-out refinancing," said Mike Fratantoni, MBA's Chief Economist. "Home price appreciation and larger equity cushions have likely made some lenders more willing to allow certain borrowers to take cash out, while still low mortgage rates may make this a more attractive opportunity for some."
MBA also measures the relative credit risk and available of conventional mortgages and government backed by FHA, the VA, and USDA. Both of these components of what MBA is now calling the Total MCAI increased in November; the Government component by less than one percent, rising from 246.0 to 247.0. The Conventional MCAI increased 2.7 percent to 84.1.
The Total MCAI and its components are constructed using the same methodology. Factors related to borrower eligibility along with underwriting criteria for over 85 lenders and investors are combined using data from the AllRegs® Market Clarity® product and a proprietary formula derived by MBA. MBA said the differences between the component indices and the total MCAI are first, the population of programs they examine, and second, the "base levels" to which they are calibrated. Using data from the MCAI and the Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the "base period"). The Total MCAI is benchmarked at 100 for that date; the Convention MCAI at 69 and the Government component at 222.