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Mortgage credit slightly more available in June

FHA, VA loosening LTV, credit score criteria drives index up

credit report

Mortgage credit availability increased in June according to the Mortgage Credit Availability Index, a report from the Mortgage Bankers Association, which analyzes data from the AllRegs Market Clarity product.  

The MCAI increased 0.6% from 115.1 in May to 115.8 in June. 

Mortgage credit loosened somewhat in June as a result of a slight net loosening in lender criteria regarding Federal Housing Administration and Department of Veterans Affairs loans with respect to minimum credit scores and maximum loan-to-value ratios.

Click the graph to enlarge.

Despite credit being more available, mortgage originations are at their lowest level in 14 years and everyone is expecting that will only get worse as mortgage rates creep up.

Chris Flanagan, MBS/ABS strategist for BofA Merrill Lynch, said mortgage activity is going to underperform in 2014.

“We were expecting $1 trillion in gross issuance for the year (at the start of 2014.) We’re at about $200 billion now,” Flanagan said. “So we’re on track for $750 billion for the year, which is less than expected.”

Click the graph to enlarge.

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.  


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