Credit availability increased in July, resuming an almost continuous rise that started last fall. The Mortgage Bankers Association said its Mortgage Credit Access Index (MCAI) rose 3.5 points or 2.9 percent from June to 125.5. The index had risen every month since last October but suffered a slight setback in June, declining by 0.6 points. The Index is nearly 10 points higher than at the beginning of this year.
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012.
All four of the MCAI’s component indices increased in July as well with the Conventional MCAI showing the greatest loosening, up 5.2 percent. The jumbo mortgage index also jumped up sharply, gaining 4.7 percent from June. The Government and Conforming MCAI’s rose 0.9 percent and 0.4 percent respectively.
“Credit availability increased in July, mainly driven by higher-balance loan programs,” said Mike Fratantoni, MBA’s Chief Economist. “Many investors are fine tuning their cash-out refinance requirements to meet increasing borrower demand for home equity financing. Some investors increased the availability of low down payment loans.”
The base period and values for two of the component indices differ from the total index. For the Conventional index it is March 31, 2012=69 and for the Government, March 31, 2012=222.
The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.) combined with underwriting criteria for over 95 lenders/investors and data from AllRegs® Market Clarity® product.