There was a 0.7% drop in the MCAI for August, to 111.5. The index, introduced earlier this year by the MBA, is calculated using data from AllRegs’ Market Clarity product. In July, the index was 112.27.
When the MCAI drops, that indicates a tightening in lending standards. Besides the decline in IO products, some lenders also have dropped loan products whose terms are greater than 30 years.
“As these loan features are outside of the qualified mortgage definition, these changes may reflect the beginning of QM implementation, and the fact that Fannie Mae and Freddie Mac are limited to acquiring loans that meet the QM definition,” said Mike Fratantoni, MBA’s vice president of research and economics.
The MBA added that shifting borrower eligibility requirements on jumbo loans (tighter and looser) offset each other in affecting the August MCAI.