Mortgage Credit Availability Tightens in August

After expanding for three months straight throughout the summer, mortgage credit access closed up slightly in August, the Mortgage Bankers Association (MBA) revealed Thursday.

MBA's Mortgage Credit Availability Index (MCAI), a gauge of credit access based on borrower profiles and underwriting criteria at lenders nationwide, slipped to 116.1 last month from 116.4 in July, the group reported. A decline indicates tighter standards overall in the market.

Both the conventional lending and government-focused indices edged down as well, each declining less than a percentage point from July.

The MCAI has increased for most of 2014, rising in six of the year's eight months as lenders expand their jumbo loan offerings to meet elevated demand. Those gains have been tempered by tightening in other categories as a result of new regulations guiding lending criteria.

Though the headline index was down in August, tightening wasn't uniform across the board, said Michael Fratantoni, chief economist for MBA.

"While overall access to credit tightened in August, we did see some loosening in certain segments of the purchase market," Fratantoni said. "In particular, lenders instituted additional offerings of loan programs like the [Federal Housing Administration's] 203(k) home improvement program and one-time-close programs for financing new construction."

Both loan types fall outside the traditional home finance market watchers typically look for: FHA 203(k) loans allow borrowers to include renovation expenses in their loan amounts, while one-time-close loans streamline the purchase and financing of new construction.