Mortgage Credit Availability Decreased in October

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The availability of mortgage credit declined in October after staying stable in September. This is indicated by the Mortgage Credit Availability Index (MCAI) of the Mortgage Bankers Association.

The Index dropped down by 2.5% to reach 113.2 in October. In September, MCAI remained unchanged at 116.1 after having declined in August. A decline in MCAI indicates that mortgage lending standards become tighter. An increase in the Index reveals loosening of these standards. MCAI was benchmarked to 1000 in March 2012.

The chief economist of MBA, Mike Fratantoni, explained that the main cause of the MCAI decline in October was the ending of special programs which were focused solely on real estate owned (REO) sales. He pointed out that the discontinuation of these programs was most likely due to declining level of REO properties for sale in the real estate market.

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Fratantoni noted that the Federal Housing Finance Agency recently announced plans to make conventional conforming mortgage credit more accessible through increasing the clarity of repurchase risk and modestly expanding the higher LTV lending. These plans were not reflected in MCAI for October as they have not been finalized yet.

MBA has included two other indices, which are components of the MCAI, in the report. The Conventional Mortgage Credit Availability Index dropped down by 5% in October. It reached 80.9 down from 85.2 in September

The Government Mortgage Credit Availability Index marked a smaller decrease. It declined by 1% in October. It reached 246.0 down from 248.0 in September.

The MCAI is based on a range of factors which affect applicants’ eligibility to qualify for mortgage credit. These include credit score, loan-to-value ratio and the type of loan which the consumer applies for. The data used for calculating the Index is taken from 85 lenders and investors and from the AllRegs Market Clarity Product.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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