Latest Mortgage App Volume Down Over Holiday-Shortened Week


The
Mortgage Bankers Association (MBA) reports that mortgage applications declined
during the week ending September 11, 2020. The week’s results include an
adjustment for the Labor Day holiday.

MBA’s Market
Composite Index, a measure of all mortgage loan application volume, decreased
2.5 percent on a seasonally adjusted basis from the previous week. It was down
13 percent on an unadjusted basis.

The Refinance
Index decreased 4 percent
from the previous week and was 30 percent higher than
the same week one year ago. The refinance share of mortgage activity was 62.8
percent of total applications compared to 63.1 percent the previous week.

The seasonally
adjusted Purchase Index was down 1 percent from one week earlier and 12 percent
before adjustment. The index still remained higher than during the same week in
2019, this time by 6 percent.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
held steady last week, and the 30-year fixed rate – at 3.07 percent – has now
stayed near the 3 percent mark for the past two months. A 5 percent decline in
conventional refinances pulled the overall index lower, but activity was still
30 percent higher than last year. With the flurry of refinance activity
reported over the past several months, demand may be slowing as remaining
borrowers in the all market potentially wait for another sizeable drop in
rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting. “Applications to buy a home also decreased last week, but the
underlying trend remains strong. Purchase activity has outpaced year-ago levels
for 17 consecutive weeks
, with a stronger growth in loans with higher balances
pushing MBA’s average loan size to a new survey high of $370,200.”  

The FHA share of
total applications decreased to 9.7 percent from 10.2 percent the prior week and
the VA share increased to 12.3 percent from 11.2 percent. USDA loans accounted
for 0.5 percent of applications compared to 0.6 percent a week earlier.

Contract interest
rates ticked down for most types of fixed rate mortgages (FRMs) and the
effective rates of all fixed-rate types moved lower. The average rate for the 30-year
FMR, loans with balances at or below the conforming limit of $510,400, was
unchanged at 3.07 percent. Points decreased to 0.32 from 0.36. 

The rate for jumbo
30-year FRM, loans with balances greater than the conforming limit, increased
to 3.41 percent from 3.40 percent. Points decreased to 0.27 from 0.31.

The average
contract interest rate for 30-year FRM backed by the FHA was unchanged at 3.16
percent, with points decreasing to
0.35 from 0.42.

The average
contract interest rate for 15-year FRM decreased to 2.61 percent from 2.62
percent, with points increasing to 0.35 from 0.33. The effective rate decreased
from last week.

The average
contract interest rate for 5/1 Adjustable rate mortgages (ARMs) increased to
3.20 percent from 2.99 percent, with
points remaining unchanged at 0.58. The effective rate increased. The ARM share
of activity increased to 2.3 percent of total applications.

MBA’s
Weekly Mortgage Applications Survey has been conducted since 1990 and covers
over 75 percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks, and thrifts. Base period and value for all
indexes is March 16, 1990=100 and interest rate information is based on loans
with an 80 percent loan-to-value ratio and points that include the origination
fee.

MBA’s
latest Forbearance and Call
Volume Survey
found another decline in the total number of loans in forbearance, this time a
15-basis point dip to 7.01 percent. According
to MBA’s estimate, 3.5
million homeowners are in forbearance plans.

The share of
Fannie Mae and Freddie Mac loans in forbearance dropped for the 14th
week in a row to 4.65 percent – also a
15-basis-point improvement. The Ginnie Mae share fell 50 basis points to 9.12
percent and the share for portfolio loans and private-label securities (PLS) grew
by 28 basis points to 10.71 percent. The percentage of loans in forbearance for
depository servicers decreased 19 basis points to 7.21 percent and that for independent
mortgage bank (IMB) servicers decreased 8 basis points to 7.33 percent.

By stage, 33.69
percent of total loans in forbearance are in their initial plan while 65.35
percent are in a forbearance extension. The remaining 0.96 percent are plan
re-entries. Total weekly forbearance requests as a percent of servicing
portfolio volume (#) increased relative to the prior week: from 0.09 percent to
0.11 percent.

“The beginning of September brought another
drop in the share of loans in forbearance, with declines in both GSE and Ginnie
Mae forbearance shares. However, at least a portion of the decline in the
Ginnie Mae share was due to servicers buying delinquent loans out of pools and
placing them on their portfolios. As a result of this transfer, the share of
portfolio loans in forbearance increased,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
“Forbearance requests increased over the week, particularly for Ginnie Mae loans.
With just under 1 million unemployment insurance claims still being filed every
week, the lack of additional fiscal support for the unemployed could lead to
even higher increases of those needing forbearance.”

MBA’s latest Forbearance
and Call Volume Survey covers the period from August 31 through September 6,
2020 and represents 74 percent of the first-mortgage servicing market (37.1
million loans). 



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