Mortgage Credit Availability in U.S. Expands in December

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According to the Mortgage Bankers Association's Mortgage Credit Availability Index (MCAI), mortgage credit availability increased in the U.S. in last the last month of 2014. The MCAI increased one percent to 115.7 in December.

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.

"In early December both Fannie Mae and Freddie Mac announced new 97 LTV loan programs aimed at expanding access to credit for new and well-qualified homebuyers, resulting in a loosening of credit over the month. The Conventional MCAI increased by 2.2 percent in December, while the Government MCAI increased less than one percent." said Mike Fratantoni, MBA's Chief Economist. "However, since only one of the two GSEs has gone live with their updates and the resulting investor pickup can be a delayed process, the impact of this announcement may take some time to fully quantify. Furthermore, Fannie Mae had been offering 97 LTV options until late October 2013 so this is really a reintroduction, not a new trend. In addition to these new high-LTV programs, investors continued to expand their product offerings for jumbo loans."

Fannie Mae and Freddie Mac both announced their versions of the low-down-payment 97 LTV program on December 8th, but only Fannie Mae's went into effect immediately following the announcement on December 15th. Since then, about one quarter of the investors in the MCAI data have started offering these new loan programs. Freddie Mac's iteration will not go live until March of this year.