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The Mortgage Bankers Association (MBA)’s monthly Mortgage Credit Availability Index rose 10 basis points in August to a reading of 104.0.
The MBA‘s index, which relies on ICE Mortgage Technology data, rose for a second consecutive month. July’s index increased by 0.2% to a reading of 103.9 and was driven by the increased availability adjustable-rate mortgages (ARMs).
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
The conventional MCAI rose 0.3%, driven by an 0.7% increase in the conforming index, while the jumbo index held steady. The government MCAI slipped 0.1%.
“Mortgage credit availability increased slightly in August, driven by a small increase in ARM product offerings, which was similar to what we saw in July,” said Joel Kan, MBA’s vice president and deputy chief economist. “With mortgage rates declining, and some renewed application activity for both purchases and refinances, the demand for ARM loans has increased somewhat, although the overall level of ARM applications remains close to historically low levels.
“Overall industry capacity seems to have stabilized after some significant declines over the past few years as companies adjusted to a lower volume environment,” he added. “Combined with recent economic uncertainty, those factors continue to keep credit supply relatively low.”
The conventional, government, conforming and jumbo MCAIs use the same methodology as the broader index but focus on different loan types. The government MCAI tracks Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture loans, while the conventional MCAI covers non-government loans.
Within the conventional index, the jumbo MCAI measures loans above conforming limits, and the conforming index tracks those within the limits. Conforming and jumbo indices share the same March 2012 base level as the broader MCAI, while the conventional and government indices were recalibrated for that period.
The broader MCAI also includes an expanded historical series dating back to 2004, providing context on credit availability throughout the housing crisis and recession, but this data is released less frequently and excludes component indices.
