The Mortgage Bankers Association (MBA) has introduced what it claims is the only standardized quantitative index solely focused on mortgage credit.
The Mortgage Credit Availability Index (MCAI) measures how much overall mortgage credit is available from month to month. The index uses underwriting criteria for over 85 lenders/investors combined with data derived from AllRegs' Market Clarity product and a proprietary formula developed by the MBA to arrive at its conclusions.
Launched in June, the index shows that credit availability increased in May compared to April.
Although credit availability trended relatively lower throughout 2012, it is now close to 2011 levels, according to the MBA.
The index increased to 108.9 in May from 108.6 in April. That is up considerably from the survey benchmark of 100 in March 2012. If the index had been tracked in 2007, it would have been roughly 800, according to the MBA.
‘We expect that the MCAI will be a valuable new source of information for market participants, policymakers and researchers,’ says Mike Fratantoni, the MBA's vice president of research and economics. ‘For lenders, the MCAI will provide an industry-wide summary statistic regarding the trend in mortgage credit availability. For policymakers, the MCAI can be a helpful gauge regarding the impact of policy changes on the availability of mortgage credit.’
Economists and other researchers may also find the MCAI useful when reporting on credit trends, he says.
According to the MBA, the number of programs that allow for LTV greater than 95% has been trending upward, largely due to participation in HARP. Some investors have lowered their requirements with regards to minimum credit score.
‘HARP lending continues to be an important component of the market,’ says Fratantoni. ‘The availability of these very high LTV loans is one of the factors leading to the MCAI showing an increase over the past year.’