Loan underwriting criteria are tightening, if the Mortgage Credit Availability Index (MCAI) is any indication. The reading for September was 110.7 -- a 0.7 percent drop from the previous month, according to the Mortgage Bankers Association (MBA), which documented a similar decline in August.
MBA's Mike Fratantoni attributed the trend to lenders increasingly eliminating products with loan terms that exceed 30 years and/or that have interest-only features. "Just as before, we believe this reflects lenders' implementation of the Ability to Repay/Qualified Mortgage regulation which comes fully into effect in January," Fratantoni explained. "Offsetting this tightening has been some increased willingness to offer higher LTV loans, particularly to jumbo borrowers."