MBA Credit & Application Update

Data from the Mortgage Credit Availability Index (MCAI), released by the Mortgage Bankers Association (MBA), reveals that mortgage credit availability decreased slightly in November.

MCAI stats show that credit availability dropped slightly by 1.2 percent for November dipping to an index reading of 110.2 from October’s 111.5.  The index has only been active since March 2012, and was benchmarked at 100 at that time.  The MBA states that if the index had been active in 2007, it would have had a mark of 800 “indicating the credit was much more available at that time.”

The MBA states further that, “a decline in the MACI indicates that lending standards are tightening.”  They clarified November’s decline by noting that, “a significant number of loan programs allowing for more than 95 LTV and low-to-mid range minimum FICOs were either discontinued…or transitioned into programs with lower LTV maximums and/or higher minimum credit scores.”

Investor “pull-back” from programs with loan terms greater than 30 years, as well as from Interest-Only loans continued, said the MBA, as the lending industry prepares for the new regulations that are scheduled to begin next month (January 2014).

The latest MBA Mortgage Application Survey for the week ending December 6, and as revealed in the Market Composite Index, increased 1.0 percent on a seasonally adjusted basis from the previous week.  The index is a measure of loan application volume.

The Refinance Index increased 2.0 percent for the same period. But was 16 percent lower than the week preceding Thanksgiving.  For the same period the Purchase Index increased 1.0 percent from the previous week, while it also declined from the week prior to Thanksgiving, but by 3.0 percent.

The refinance share of overall mortgage activity increased to 65 percent of total applications, up from 63 percent the previous week.

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