Mortgage credit continued to trend higher in February, following a steady increase in availability since November 2013, the latest report from the Mortgage Bankers Association revealed.
The mortgage credit availability index edged higher 0.44% to 113.5 in February from 113 in January.
If the MCAI had been tracked in 2007, it would have sat around 800. The index was benchmarked to 100 in March 2012.
"For the third month in a row, mortgage lenders and investors slightly expanded credit offerings in February on net, as a result of offsetting factors,” said Mike Fratantoni, MBA’s chief economist.
"Specifically, the recently implemented QM/ATR sections of the new Consumer Financial Protection Bureau regulations stipulate that ARM loans must qualify at the highest allowable rate for the first five years of the loan,” he continued.
Because of this, many investors have discontinued loans whose interest rate adjusts after only 3 year (also known as 3/1 ARMS).
But despite the pull back in the 3/1 programs, lenders and investors added several new 5+ year ARM programs, including those for Jumbo loans, to their repertoire resulting in a net increase to the MCAI, Fratantoni explained.
