string of increases in purchase mortgage applications came to an end last week
and refinancing volume pulled back as well. Consequently, the Mortgage Bankers
Association’s (MBA’s) Market Composite Index, a measure of overall application volume
during the week ended June 19 dropped significantly, down 8.7 percent on a
seasonally adjusted basis. The index was 9.0 percent lower before adjustment.
adjusted Purchase Index decreased 3.0 percent from one week earlier. The
unadjusted Purchase Index fell by 4.0 percent but was still up 18.0 percent compared
to the same week in 2019.
Index dropped 12 percent from the previous week and was 76 percent higher than
the same week one year ago. Applications for refinancing represented 61.3
percent of the total compared to 63.2 percent the previous week.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
applications decreased 9 percent last week, with both refinance and purchase
activity falling despite the 30-year fixed rate mortgage staying at 3.30
percent – the record low in MBA’s survey,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “Refinance applications dropped
to their lowest level in three weeks, but the index remained 76 percent higher
than a year ago. Despite the decline last week, MBA still anticipates refinance
originations to increase to $1.35 trillion in 2020 – the highest level since
Added Kan, “Even
with high unemployment and economic uncertainty, the purchase market is strong.
Activity has climbed above year-ago levels for five straight weeks and was 18
percent higher than a year ago last week. One factor that may potentially crimp
growth in the months ahead is that the release of pent-up demand from earlier
this spring is clashing with the tight supply of new and existing homes on the
market. Additional housing inventory is needed to give buyers more options and
to keep home prices from rising too fast.”
applications accounted for 11.4 percent of the total, up from 11.0 percent a
week earlier and the share of VA applications pulled back 0.5 percentage point to
11.0 percent. The USDA share was unchanged at 0.7 percent.
Both contract and
effective interest rates were mixed during the week, but most movements were
small. The average contract interest rate for 30-year fixed-rate mortgages
(FRM) with conforming loan balances ($510,400 or less) was unchanged at 3.30
percent. Points moved to 0.32 from 0.29 and the effective rate increased.
interest rate for jumbo 30-FRM, loans with balances exceeding the conforming
limit, decreased to 3.62 percent from 3.67 percent. Points increased to 0.29
from 0.28 and the effective rate was lower.
FRM backed by the FHA had an average interest rate of 3.35 percent, up from
3.33 percent the prior week. Points dipped to 0.22 from 0.23 and the effective
contract interest rate for 15-year FRM was 2.81 percent with 0.30 point. The
prior week the rate was 2.80 percent with 0.28 point. The effective rate moved
rate for 5/1 adjustable rate mortgages (ARMs) averaged 3.09 percent, up from
3.07 percent, but points fell to 0.01 from 0.29, pulling the effective rate
lower. The ARM share of activity increased to 3.1 percent of total applications
from 2.8 percent during the week ended June 12.
MBA’s Weekly Mortgage Applications
Survey 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.
also released data from its Forbearance and Call Volume Survey for the week
ended June 14. The total number of loans in forbearance declined
during the week for the first time since the survey began in March, dropping to 4.2 million from 4.3 million
a week earlier. This brought the percentage of all loans in COVID-19
forbearance down from 8.55 percent to 8.48 percent.
The share of loans
serviced for Ginnie Mae (FHA and VA loans) remained steady at 11.83 percent of
that portfolio, but forbearance plans among those serviced for the GSEs dropped
7 basis points to 6.31 percent, the second decrease in two weeks. The greatest
improvement was in the loans serviced for portfolio lenders and private label
securities (PLS) which fell by 19 basis points to 9.99 percent. The percentage
of loans in forbearance for depository servicers was 9.15 percent, and the
percentage of loans in forbearance for independent mortgage bank (IMB)
servicers decreased to 8.40 percent.
“The lower share of loans in forbearance was led by
declines in GSE and portfolio and PLS loans, as more of those borrowers exited
than entered a new forbearance plan,” said Mike Fratantoni, MBA’s Senior Vice President and
Chief Economist. “Fewer
homeowners in forbearance underscores the continued improvements in the job
market, and provides another sign of the fundamental health of the housing
market, which has rebounded considerably over the past several weeks.”
Added Fratantoni, “The big unknown with respect to this
positive development is the extent to which it relies upon policy measures put
in place to help families through this crisis, particularly the stimulus
payments and enhanced unemployment insurance benefits that were key parts of
the CARES Act. We expect to see further improvements in the weeks ahead given
the drop in forbearance requests this week.”
requests as a percent of servicing portfolio volume (#) decreased across all
investor types: from 0.19 percent to 0.15 percent and the forbearance related
share of calls declined from 8.0 percent of servicing portfolio volume to 7.7
MBA’s latest Forbearance and Call
Volume Survey covers the period from June 8 through June 14, 2020, and
represents 76 percent of the first-mortgage servicing market (38.2 million