Mortgage credit availability tightening: MBA

November 5, 2014

WASHINGTON (11/6/14)--Mortgage credit availability narrowed in October, as the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index dropped 2.5% to a reading of 113.2 for the month ( Nov. 5).

A dropping index, according to Housingwire, signals tightening lending standards, while increases in the index often indicate that credit for prospective homebuyers is loosening.

"The major cause of the decline in the credit index in October was the removal of special loan programs which only pertain to (real estate owned property) sales," said Mike Fratantoni, MBA chief economist. "These programs were likely discontinued due to the shrinking level of REO properties for sale on the market."

The MBA also reported Wednesday that mortgage application activity fell for the week ending Oct. 31, the fourth straight week of decline.

While the refinance index fell 5.5%, the purchase index climbed by 2.6%, Moody's reported, with mortgage-interest rates also increasing for the week ( Nov. 5).

On a four-week moving average, refinance activity has jumped 25.2% over the last month, while purchase activity has fallen 4.5% over the last month.

Purchase applications are also down 7.9% year-over-year.

"The last week of October showed little sign of a recovery in mortgage applications," said Michael McGrane, Moody's analyst ( "Refinancing has increased somewhat over the past month, aided by a modest decline in mortgage-interest rates in October. Nonetheless, it is unlikely that refinancing will increase further."

After dropping to 4.13% the week prior, 30-year fixed-rate mortgage rate climbed to 4.17% for the week ending Oct. 31.

The contract rate for 30-year fixed-rate jumbo mortgages was unchanged at 4.13%, and the five-year adjustable-rate mortgage rate increase 14 basis points to 3.08%, exactly where it was a year ago at this time.