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34 | M R EP O RT 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 A Decline in Credit Availability in November MBA Associate VP Joel Kan discusses increases in conventional credit availability, and how it has been offset by a decrease in government credit. M ortgage credit avail- ability declined in November, according to a recent report from the Mortgage Bankers As- sociation (MBA). The Mortgage Credit Availability Index (MCAI) showed data analyzed from Ellie Mae's AllRegs Market Clarity business information tool that measures increased and decreased percentages relative to credit avail- ability and limits. Declines in the MCAI indicate that lending standards are tighten- ing, while increases in the index are suggestive of loosening credit. The index was benchmarked to 100 in March 2012. "Credit availability in November was down slightly, even as the housing market continues to thrive amidst the im- proving job market. However, the picture was different depending on the market segment. An in- crease in conventional credit avail- ability was offset by a decrease in government credit, as lenders reduced their offerings of govern- ment loan programs with lower credit scores, as well as those for investment homes," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. Percentage differences included: • The MCAI fell by 0.6% to 124.9% in November • Conventional MCAI increased 1.9% • Government MCAI decreased by 2.7% • Jumbo MCAI increased by 3.0% • Conforming MCAI rose by 0.2% The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan pro- grams that fall under conforming loan limits. "Credit supply for jumbo loans increased for the fifth straight month. Lenders scaled back on jumbo supply at the onset of the pandemic, and even with the re- cent growth in credit availability, the jumbo index remains more than 40% below February 2020 levels," Kan added. "As home- price growth continues, and mort- gage rates creep higher, increased credit availability is needed for qualified borrowers looking to purchase a home—especially for first-time homebuyers, who rely heavily on government mortgage programs." The Total MCAI has an ex- panded historical series that gives perspective on credit availability going back approximately 10-years. Expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI. The expanded his- torical series covers 2004 through 2010 and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years—including the hous- ing crisis and ensuing recession. Mortgage Credit Availability Index, Index Level by Month (NSA, 3/2012=100)