Mortgage
application volume declined for the fifth straight week during the period ending
April 2, and by the largest amount over that period. The Mortgage Bankers
Association said its Market Composite Index fell by 5.1 percent on a seasonally
adjusted basis from the previous week and by 5.0 percent before adjustment.

The
Refinance Index was down 5 percent compared to the previous week and was 20
percent lower than the same week one year ago
. The refinance share of mortgage
activity was 60.3 percent  compared to 60.6
percent the previous week.  

The
seasonally adjusted Purchase Index decreased 5 percent as well and the
unadjusted index was 4.0 percent lower. Purchases, however, were 51 percent
higher than the same week in 2020.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
rates resumed their upward move last week, with the 30-year fixed rate at 3.36
percent. The return of rates to the highest level since last June contributed
to a slowdown in applications for both purchases and refinances. The rapidly
recovering economy and improving job market is generating sizeable home buying
demand, but activity in recent weeks is constrained by quicker home-price
growth and extremely low inventory,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “Refinance applications
declined for the fifth straight week, but there was a gain in VA loan activity.
Overall, refinance demand has decreased, with volume over the past 10 weeks
down by more than 30 percent.”

The FHA share of total applications decreased to 10.2
percent from 11.3 percent the previous week while the VA share increased to
13.8 percent from 10.3 percent. Applications for USDA mortgages ticked up from
0.4 percent to a 0.5 percent share. Loan balances declined with the average for
a mortgage dipping to $322,700 from $324,800 the prior week. Purchase mortgages
averaged $399,500 compared to $401,400.

The average contract interest rate for 30-year
fixed-rate mortgages (FRMs) with loan balances at or below the conforming limit
of $548,250, increased to 3.36 percent from 3.33 percent, with points
increasing to 0.43 from 0.39. The effective rate increased to 3.48 percent. 

The rate for jumbo 30-year FRM, loans with balances greater
than $548,250, increased to 3.41 percent from 3.34 percent, with points increasing to 0.41 from 0.31. The effective rate  was 3.53 percent.

The average contract interest rate for 30-year FRMs backed
by the FHA was 3.36 percent with 0.36 point. The prior week the rate was 3.29
percent with 0.34 point. The effective rate was 3.47 percent.

Fifteen-year
FRMs had a rate of 2.74 percent, up 3 basis points week-over-week. Points
dipped to 0.32 from 0.33 and the effective rate increased to 2.82 percent.

The
average 5/1 adjustable rate mortgage (ARM) had a rate of 2.92 percent, up  from 2.85 percent, with points increasing to 0.46 from 0.40. The effective rate was 3.09
percent.  The adjustable-rate mortgage
(ARM) share of activity increased by 3 basis points to 3.7 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 says its Forbearance and Call
Volume Survey, covering the period from March 22 through March 28,
2021 found the total number of loans in forbearance down 6 basis points to 4.90
percent of servicer’s portfolios. MBA estimates
that 2.5 million homeowners remain in those plans. 
By stage, 13.7 percent of the loans are in
the initial forbearance plan stage, 84.1 percent have extended their plans, and
the remaining 2.2 percent are re-entries to the program. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 2.72
percent, a 5-basis-point improvement. Ginnie Mae loans fell 5 basis points to
6.78 percent, while the forbearance share for portfolio loans and private-label
securities (PLS) declined by 10 basis points to 8.80 percent.  The percentage of forborne loans in
independent mortgage bank (IMB) servicer portfolios was 5 basis points lower at
5.18 percent and for those serviced by depository servicers the decline was 7
basis points to 5.03 percent.

“The share of loans in
forbearance decreased for the fifth straight week, and new forbearance requests
dropped to their lowest level since March 2020
. The share of loans in
forbearance also decreased for all three investor categories,” said Mike Fratantoni, MBA’s Senior Vice
President and Chief Economist. “More than 21 percent of borrowers in forbearance
extensions have now exceeded the 12-month mark. Of those that exited
forbearance in March, more than 21 percent received a modification, indicating
that their income had declined and they could not afford their original
mortgage payment.”

Fratantoni
added, “March was a turning point
for the economy, with hiring shifting into a higher gear and the unemployment rate
continuing to decline. However, there are still more than 4.2 million people
who have been actively looking for work for more than six months. Homeowners
who are still facing hardships and need to extend their forbearance term should
contact their servicer.”

By Jann Swanson , dated 2021-04-07 08:43:43

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Courtesy of Mortgage News Daily

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