Positive signs for the real estate industry continue to be reported from many different areas in the market place. From housing prices that have demonstrated a slow, but steady climb to a recent report on mortgage credit availability, the real estate market indicates positive momentum.
The majority of housing markets all over the country, including Coral Gables luxury homes, Weston luxury homes and others, are progressing toward full price recovery, and as a side bar to that is the availability of mortgage credit available.
Mortgage Credit Availability
The most recent news on mortgage credit availability indicates recovery is proceeding in a positive direction for the real estate industry. This information comes from the Mortgage Bankers Association which produces a monthly Mortgage Credit Availability Index (MCAI).
The MCAI catalogs current mortgage underwriting parameters into a single index number to help determine on a month to month basis whether the overall mortgage credit is less available or more available to interested home buyers.
There are five total measures of credit availability that MBA now reports on as part of the monthly MCAI release with historical data back to 2011. These are:
- Government Mortgage Credit Availability Index
- Conventional Mortgage Credit Availability Index
- Conforming Mortgage Credit Availability Index
- Jumbo Mortgage Credit Availability Index
- Total Mortgage Credit Availability Index
The Total MCAI, along with the Government, Conventional, Conforming, and Jumbo MCAIs are basically constructed by using the same methodology. Each are designed to show relative credit risk/availability for their respective market index.
According to MBA, the primary difference between the each of the component indices and the total MCAI is the loan programs population.
In March 2012, the index was benchmarked to 100.
August 2015 Report on Mortgage Credit Availability
The latest report from the MCAI shows an increased in mortgage credit availability for the month of August. Although slight, the move of 0.5 percent to 126.1 is an indication of a national loosening of credit, says the MBA authors.
In reviewing the individual component indices, the numbers broke down as follows:
- Government MCAI (up 0.4 percent)
- Conventional MCAI (up 0.5 percent)
- Conforming MCAI (up 0.3 percent)
- Jumbo MCAI (up 0.7 percent over the month)
MBA’s Chief Economist Mike Fratantoni said not only have jumbo loan products loosen up over the past few months, but the other areas, including the conventional mortgage credit and the conforming mortgage credit have also loosen up a bit. All good news for home buyers looking for mortgage loans.
This type of market benefits interested borrowers who may have credit scores that are lower than the ideal. It is also positive for mortgages with higher loan-to-value ratios.
Fratantoni pointed out that the increase of mortgage credit availability in August is just the latest of good new markers for the real estate industry. Out of the last 9 months, 8 of them have continued to show increases.
Recent announcements from Fannie Mae could eventually add to mortgage credit availability. The market is anticipating changes to Fannie Mae’s affordability suite of products, and is expected to be a win for home buyers looking at Coral Gables luxury homes, Weston luxury homes, or other properties. The MCAI and its currently reported numbers have not been impacted these changes at this time, Fratantoni reports, so greater marked improvement may be coming in the months ahead.
