MReport December 2021

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M R EP O RT | 39 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Mortgage Credit Availability Ticked Upwards in October Lending standards loosened, driven by an increase in conventional mortgage credit, as well as an expansion in agency programs for ARMs and high-balance loans. L ending standards overall loosened during October, the Mortgage Credit Avail- ability Index (MCAI) from Mortgage Bankers Association (MBA) and Ellie Mae indicates. A decline in the MCAI indicates that lending standards are tighten- ing, while increases in the index are indicative of loosening credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etcetera). The latest MCAI rose 0.1% to 125.7 in October. The index benchmark was set to 100.0 in March of 2012. The Conventional MCAI increased 0.1%, while the Government MCAI remained essentially unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 4.1%, and the Conforming MCAI fell by 6.0%. "Credit availability inched forward in October, but the overall index was 30% lower than February 2020 and close to the lowest supply of mortgage credit since 2014," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "Within the subindexes, a 4% increase in the jumbo index was essentially offset by a 6% drop in the conforming index. There was an increase in the supply of jumbo ARM and non-QM products, which drove most of the increase in the jumbo index. On the conforming side, there was a pullback in ARMs, higher LTV loans, and lower credit score products. While there is tightening in ARM credit availabil- ity both for jumbo and conforming loans, ARM loans have accounted for a small share of loan applica- tions, ranging from 2.5% to 5% of applications to date in 2021." "Tight credit availability, combined with ongoing supply and affordability challenges, are significant obstacles for some prospective first-time buyers," Kan added Note: Data before 2011 was generated using less frequent and less complete data measured at six-month intervals interpolated in the months between for charting purposes, according to the MBA. The Total MCAI has an ex- panded historical series that gives perspective on credit availability from the last 10 years. It was creat- ed to provide historical context to the current series by showing how credit availability has changed, including during the housing crisis and ensuing recession.

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