Credit tightens as high LTV programs end

by Ryan Smith10 Dec 2013
Mortgage credit tightened slightly in November as several high loan-to-value programs expired, according to data released Tuesday.

The Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI) slipped 1.2% in November, from 111.5 to 110.2. a decline in the MCAI indicates tightening credit standards, while an increase indicates that credit is loosening, according to MBA.

Credit appears to be tightening because of the discontinuation of several loan programs allowing low- to mid-range minimum FICO scores and loan-to-value ratios of more than 95%, according to MBA. Similar loan programs were transitioned into programs with higher credit score requirements or lower maximum LTV. Investors are also shying away from interest-only programs and programs with terms of more than 30 years in anticipation of new mortgage regulations set to take effect in January.

At its inception in March of 2012, the MCAI was benchmarked at 100. Had it been tracked just prior to the housing collapse in 2007, that benchmark would have been about 800.



Is TILA-RESPA a good or bad thing long term?