May 14, 2019
Mortgage Credit Shows Signs of Loosening
In early April, the Mortgage Bankers Association released their Mortgage Credit Availability Index (MCAI) showing that credit availability increased in March, based on that organization’s analysis of Ellie Mae’s AllRegs Market Clarity business information tool. The March number was a 1.1 percent rise from February’s, bringing the score to 182.1. Interestingly, the 1.1 percent rise is an average of the Conventional MCAI—which increased by 3.6 percent—and the Government MCAI, which went through a 1.2 percent decrease.
The Government MCAI is an examination of FHA, VA, and USDA loan programs. The Conventional MCAI, meanwhile, looks at only non-governmental loan programs, and incorporates two subsets of loan types: conforming loans and jumbo loans. The former contains loans that fall under conforming loan limits, while the latter is composed of conventional programs that fall outside of the standard conforming loan limits. Much of the jump in the Conventional MCAI in March was due to a spike in the number of jumbo mortgage offerings made, which increased the Jumbo MCAI sub-index by 5 percent. The Conforming MCAI sub-index rose 1.4 percent.
The reason for the decline in the Government MCAI is the trend away from FHA and VA loans for refinance on the part of investors.
The methodology used by the Mortgage Bankers Association to compile the MCAI is the calculation of a number of elements related to potential-buyer eligibility, including loan-to-value ratio, loan type, and credit score, among others. Using the AllRegs Market Clarity tool, the Association combines these points of information with other metrics and underwriting criteria for more than 95 lenders and investors, processed via a proprietary formula to determine mortgage credit availability at any given point in time.
A decline in the MCAI generally indicates a tightening of lending standards while the sort of increase in the MCAI, as seen lately, would tend to point to loosening credit standards—also reflected in the fact of the percentage of jumbo loans responsible for the rise.
Whichever type of loan one takes out, security in home buying is something that can only be assured by a solid title search and a policy of title insurance to match it. Topouzis & Associates, P.C. is here to act as a bulwark against title problems initiated in the past. We do title searches and ensure a buyer is gaining clear title to their new property—and we back our services with offerings of title insurance (click here), in case someone along the line of ownership did something that will weaken title at some point in the future.