Mortgage credit availability inched up in August as rates cooled

"Mortgage credit availability increased slightly in August, driven by a small increase in ARM product offerings, which was similar to what we saw in July, said Joel Kan, MBA's vice president and deputy chief economist. With mortgage rates declining, and some renewed application activity for both purchases and refinances, the demand for ARM loans has increased somewhat, although the overall level of ARM applications remains close to historically low levels."

"The conventional, government, conforming and jumbo MCAIs use the same methodology as the broader index but focus on different loan types. The government MCAI tracks Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture loans, while the conventional MCAI covers non-government loans. Within the conventional index, the jumbo MCAI measures loans above conforming limits, and the conforming index tracks those within the limits."

"Conforming and jumbo indices share the same March 2012 base level as the broader MCAI, while the conventional and government indices were recalibrated for that period. The broader MCAI also includes an expanded historical series dating back to 2004, providing context on credit availability throughout the housing crisis and recession, but this data is released less frequently and excludes component indices."

A decline in the MCAI indicates tightening lending standards while increases indicate loosening credit. The conventional MCAI rose 0.3%, led by a 0.7% increase in the conforming index, with the jumbo index unchanged and the government MCAI down 0.1%. A small rise in ARM product offerings drove the modest increase in credit availability, supported by lower mortgage rates and renewed purchase and refinance activity, though ARM application levels remain near historic lows. Industry capacity appears to have stabilized after prior declines, yet recent economic uncertainty continues to keep overall credit supply relatively low. The index is benchmarked to 100 in March 2012.

Read at www.housingwire.com