MBA Credit & Application Update

The latest data from the Mortgage Bankers Association (MBA) shows that both mortgage credit availability and mortgage application activity rose.

The MBAs Mortgage Credit Availability Index (MCAI) for December increased slightly from the previous month.  The MCAI is a relatively new index, and is the only standardized quantitative index that is solely focused on mortgage credit.

The index increased 0.6 percent to 110.9 in December rising slightly from 110.2 in November.  An increase in the MCAI indicates that lending standards are loosening, while a decrease in the index indicates a tightening of credit.  The index was benchmarked to 100 in March of 2012.

Though there was an increase in the index it was so slight that credit availability was essentially unchanged.  The MCAI is calculated using different factors related to borrower eligibility that include, the credit score, loan type and loan-to-value ratio.

Mortgage application activity is monitored on a weekly basis, and the MBAs Weekly Mortgage Applications Survey shows that the Market Composite Index (MCI) for mortgage loan application volume rose 11.9 percent for the week ending on January 10th, this on a seasonally adjusted basis, and up from the previous week.  On an unadjusted basis the Index jumped 61 percent from the previous week.

A closer look shows that the Refinance Index increased 11.0 percent from the previous week, while the Purchase Index rose 12.0 percent on a seasonally adjusted basis.  The unadjusted Purchase Index increased by 66 percent compared to one week earlier.

The survey shows that the refinance share of all mortgage applications dropped slightly to 62 percent of total applications, down from 63 percent the previous week.  The adjustable-rate mortgage (ARM) share of total mortgage applications remained unchanged at 8.0 percent from the previous week.

The average contract interest rate for conventional 30-year fixed-rate loans declined slightly to 4.29 percent, down from 4.36 percent.