Purchase mortgage applications
rose for the 6th straight week, driving the Mortgage Bankers Association’s
Market Composite Index back into positive territory. The Index, a measure of
mortgage loan application volume, increased 2.7 percent on a seasonally
adjusted basis during the week ended May 22. On an unadjusted basis, the Index
increased 3 percent compared with the previous week.
adjusted Purchase Index rose by 9 percent compared to one week earlier and was
7 percent higher on an unadjusted basis. The volume of purchase applications
pulled ahead of the level during the same week in 2019 by 9 percent, the first year-over-year
gain since the week ended March 6.
Index decreased 0.2 percent from the previous week but remained 176 percent
higher than the same week one year ago. The refinance share of mortgage
activity decreased to 62.6 percent of total applications from 64.3 percent the
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
“The home purchase
market continued its path to recovery as various states reopen, leading to more
buyers resuming their home search. Purchase applications increased 9 percent
last week – the sixth consecutive weekly increase and a jump of 54 percent
since early April. Additionally, the purchase loan amount has increased
steadily in recent weeks and is now at its highest level since mid-March,” said
Joel Kan MBA’s Associate Vice President of Economic and Industry Forecasting.
“Despite mortgage rates hovering near MBA’s all-time survey low, refinance
activity was essentially flat but still 176 percent higher than last year.
Conventional refinance applications increased 2 percent, while government
refinancing was down almost 7 percent.”
FHA share of total applications decreased to 11.2 percent from 11.5 percent the
previous week and the VA share shrunk to 12.4 percent from 13.4 percent. The
USDA share ticked down to 0.6 percent from 0.7 percent. The average size of a
loan during the week increased from $310,600 to $314,900 and purchase loans grew
to $340,200 from $330,700.
were mixed. The average contract interest rate for 30-year fixed-rate mortgages
(FRMs) with loan balances at or below the conforming limit of $510,400 grew by
1 basis point to 3.42 percent. Points
were unchanged at 0.33 and the effective rate increased.
contract interest rate for jumbo 30-year FRMs, loans with balances greater than
the conforming limit increased to 3.71 percent from 3.66 percent. Points fell
to 0.29 from 0.37 and the effective rate increased.
FRM had an average rate of 3.41 percent with 0.30 point. The previous week the
rate was 3.46 percent with 0.33 point. The effective rate also fell.
contract interest rate for 15-year fixed-rate mortgages decreased to 2.87
percent from 2.88 percent, with points increasing to 0.30 from 0.27. The
effective rate declined.
The average contract
interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.08
percent from 3.19 percent, with
points increasing to 0.01 from -0.05 and the effective rate moved lower. The ARM
share of activity increased to 3.4 percent of total applications from 3.2
percent the previous week.
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
MBA also reported that forbearance plans in place on
May 17 were up from 8.16 percent of servicer portfolios during the week ended
May 10 to 8.36 percent. The number of plans rose from 4.1 million to 4.2
by Ginnie Mae (VA, FHA, and USDA loans) again had the largest overall share of
loans in forbearance by investor type (11.60%) and the largest increase from
the previous week (34 basis points). The GSEs Fannie Mae and Freddie Mac had
6.36 percent of their loans in plans, up from 6.25 percent the prior week. Loans
in forbearance that were being serviced for others, such as private-label
securities and portfolio loans accounted for 9.54 percent of that portfolio, up
from 9.26 percent the previous week.
number of loans in forbearance for depository servicers rose to 9.13%, while
the number of loans in forbearance for independent mortgage bank (IMB)
servicers increased to 8.11%. Over the past four weeks, the difference between
the percentage of loans in forbearance for depository servicers compared to IMB
servicers has narrowed, from 135 basis points as of April 19 to 102 basis
points as of May 17.
“Although job losses
continue at extremely high rates, mortgage servicers are reporting only modest
increases in the share of loans in forbearance as of May 17,” said Mike Fratantoni, MBA’s Senior Vice President
and Chief Economist. “The
decline in employment and income is hitting FHA and VA borrowers harder,
leading to 11.6 percent of Ginnie Mae loans currently in forbearance.”
“Forbearance requests declined relative to the prior week, and while call
up, servicers appear well staffed for this volume, as wait times and
abandonment rates dropped. Total loans in forbearance grew relative to the
prior week: from 8.16 percent to 8.36 percent. This 20-basis point weekly
increase was the smallest increase reported since the week of March 9.
MBA’s latest Forbearance and Call
Volume Survey covers the period from May 11 through May 17, 2020 and represents
almost 77 percent of the first-mortgage servicing market (38.3 million loans).