Mortgage application activity rebounded last week from the previous week’s
Labor Day holiday lull. The Mortgage Bankers Association’s (MBA’s) Market
Composite Index, a measure of mortgage loan application volume, increased 6.8
percent on a seasonally adjusted basis and 18 percent unadjusted during the
week ended September 18. The prior week’s results included an adjustment to account for the
holiday-shortened work week.
and purchasing application volumes were strong. The Refinance Index increased 9
percent from the previous week and was 86 percent higher than the same week one
year ago. The refinance share of applications constituted 64.3 percent of the total,
up from 62.8 percent a week earlier.
adjusted Purchase Index added 3 percent and the unadjusted index was up 13
percent. Volume was 25 percent higher than the same week one year ago. The last
time the Purchase Index did not post a year-over-year gain was during the week
ended May 15.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
applications activity remained strong last week, even as the 30-year fixed-rate
mortgage and 15-year fixed-rate mortgage increased to their highest levels
since late August. Purchase applications were up over 25 percent from a year
ago, and the demand for higher-balance loans pushed the average purchase loan
size to another record high. The strong interest in homebuying observed this
summer has carried over to the fall,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “Despite the uptick in rates,
refinance applications increased around 9 percent and were almost 86 percent
higher than last year. Both conventional and government refinance activity, and
in particular FHA refinances, picked up last week.”
FHA share of total applications increased to 10.1 percent from 9.7 percent the
prior week and the VA share dipped to 12.0 percent from 12.3 percent. The USDA
share rose to 0.6 percent from 0.5 percent. The average size of a purchase loan
was $371,000 compared to $370,200 but the average of all loans fell to $324,000 from $325,000.
contract interest rate for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $510,400 increased to 3.10 percent
from 3.07 percent, with points increasing to 0.46 from 0.32. The effective rate
was higher than the prior week.
The rate for jumbo
30-year FRM, loans with balances exceeding the conforming limit, decreased to
3.35 percent from 3.41 percent, with
points increasing to 0.42 from 0.27. The effective rate moved lower.
The rate for 30-year
FRM backed by the FHA averaged 3.23 percent with 0.37 point. The prior week the
average was 3.16 percent, with 0.35
point. The effective rate increased.
The rate for
15-year FRM increased to 2.64 percent from 2.61 percent. Points grew to 0.47
from 0.35 and the effective rate also rose.
contract interest rate for 5/1 adjustable rate mortgages (ARM)s ticked down 1
basis point (bp) to 3.19 percent but points rose to 0.64 from 0.58. increasing
the effective rate. The ARM share of activity decreased to 2.2 percent of total
applications from 23 percent the prior week.
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
says the volume of loans in forbearance has now declined below 7 percent of the
total being serviced. There was another 8-bp reduction during the past week, to
6.93 percent, a five-month low. There are an estimated 3.5 million loans still
in plans. Of those, 31.65 percent are in the initial plan stage, while 67.01
percent are in a plan extension, and 1.34 percent are re-entries into the
The share of GSE
(Fannie Mae and Freddie Mac) loans in forbearance dropped for the 15th
week in a row to 4.55 percent, a 10-bps improvement. The share of Ginnie Mae
(FHA/VA) loans rose 3 bps to 9.15 percent and there was a 19 bps drop in the
percentage of loans being serviced for bank portfolios and private label
securities (PLS) to 10.52 percent. Depository servicers had 7.26 percent of
their portfolios in forbearance plans, a 7-bp decline, and the percentage of
loans in forbearance for independent mortgage bank (IMB) servicers decreased 3
bps to 7.18 percent.
“The share of
loans in forbearance has dropped to its lowest level in five months, driven by
a consistent decline in the GSE share in forbearance,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief Economist. “However, not only the did the
share of Ginnie Mae loans in forbearance increase, new requests for forbearance
for these loans have increased for two consecutive weeks. While housing market
data continue to show a quite strong recovery, the job market recovery appears
to have slowed, and we are seeing the impact of this slowdown on FHA and VA
borrowers in the Ginnie Mae portfolio.”
latest Forbearance and Call Volume Survey covers the period from September 7 through
September 13, 2020 and represents 74 percent of the first-mortgage servicing
market (37.2 million loans).