Mortgage Credit Availability in U.S. Increases in February

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According to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA), mortgage credit availability increased slightly in February 2015.

The MCAI increased 0.7 percent to 118.6 in February.  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.

"Credit availability improved marginally in February, led by further increases in jumbo loan programs, and additional take-up of Fannie Mae's 97 LTV program," said Mike Fratantoni, MBA's Chief Economist.  "More than half of investors are now offering a 97 LTV program, and Freddie Mac announced that their program will be available in mid-March.  In terms of conforming credit, this was offset by somewhat tighter constraints on cash-out loans and investors with multiple financed properties."

Of the four component indices, the Jumbo MCAI saw the greatest easing (up 1.4 percent over the month) followed by the Conventional and Government MCAI (both up 0.6 percent). The Conforming MCAI decreased slightly over the month from 113.6 last month to 113.4 this month.

The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. Similarly, the Jumbo MCAI examines everything flagged as "Jumbo" while the Conforming MCAI examines loan programs that fall under conforming loan limits.

The Conforming and Jumbo indices have the same "base levels" as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted "base levels" in March 2012. 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") relative to the Total=100 benchmark.