Mortgage borrowers find it a bit easier to qualify

NEW YORK – May 13, 2015 – Lenders continue to loosen standards on home loans. Government and jumbo programs saw the most easing, while conventional conditions tightened.

At 122.0, the Mortgage Credit Availability Index (MCAI) was higher than it's been in at least four years, and possibly five years based on a historical graph.

An increase in the index – which provides a standardized quantitative index solely focused on mortgage credit – indicates that lending standards on home loans are loosening.

The Mortgage Bankers Association reported the index based on data from Ellie Mae Inc.

March 31, 2012, has been established as the base period, with an index of 100.

The index was up for the third consecutive month from 121.4 in March.

As of April 2014, the index was 113.8.

"The increase was driven by new offerings of FHA's 203K home improvement program, new VA offerings, and new jumbo products," MBA Chief Economist Mike Fratantoni said in a written statement. "The increase was partially offset by some investors tightening underwriting criteria on conventional cash out offerings."

But while the trend has been improving, credit standards remain nowhere near levels during the pre-crisis go-go years – with the index estimated to have been approximately 880 in 2006.

The Government MCAI rose 1.1 percent from March, the best month-over-month improvement of any loan type.

A 0.8 percent rise was recorded for the jumbo index, while credit standards on conforming loans eased 0.2 percent.

The only category to tighten was conventional, with that index contracting 0.6 percent.

Copyright © 2015 Mortgage Daily. Distributed by Tribune Content Agency, LLC.

Average 30-Year Mortgage Drops Below 4%

 

30 year loan plans to hit their lowest numbers since June of last year (2013). Yields from Treasury Bonds marked new lows. Now it is much more affordable to borrow the funds necessary to buy a home.

 

• Freddie Mac says nationwide average for 30 year loan is 3.97%, down from 4.12 while 15 year loans are at 3.18% from 3.3%
  
• 10 year notes now trade at 2.1% which is down from 2.34%. The bond yields are rising, because of the falling prices on bonds.
  
• Treasury yields have dropped, and the federal reserve may force the Federal Reserve to delay interest rate increases.
  
• Down Jones Industrial Average is down 460 points and all three US Stock indexes were in negatives for the year. Fear Index rose sharply.
  
• Mortgage rates are down, despite the Federal Reserve's ending of monthly bond purchases. This is to keep long term borrowing rates low. Shorter term loan rates will be kept at near zero levels until inflation shows signs of rising.
  
• Freddie Mac surveys lenders across the US to calculate average mortgage rates. This average DOES NOT include extra fees, which most borrowers pay to get lower rates. A POINT IS 1% OF THE LOAN AMOUNT.
  
• Average fee for a 30 and 15 year mortgage is .5 points. For a one-year ARM, the average rate fell to 2.38 percent from 2.42 percent. The fee held at 0.4 point.