The
solid 8.6 percent increase in mortgage application volume during the week ended
April 16, only the fourth gain thus far in 2021, was short lived. The Mortgage
Bankers Association reports that its Market Composite Index resumed a downward
trend
during the week ended April 23 even though mortgage rates moved lower. The
index, a measure of mortgage application volume, decreased 2.5 percent on a
seasonally adjusted basis and 2 percent unadjusted compared with the previous
week.

The Refinance
Index decreased 1 percent
from the previous week and was 18 percent lower than
the same week one year ago. Applications for refinancing remain the majority; the
share last week increased to 60.6 percent of total applications from 60.0
percent the previous week.

The seasonally
adjusted Purchase Index dropped by 5 percent from one week earlier and 4
percent unadjusted. It was 34 percent higher than the same week in 2020.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
applications decreased last week, even as mortgage rates dropped for the third
week in a row. The 30-year fixed rate was down 3 basis points to 3.17 percent,
which is still 32 basis points higher than the low reported in December 2020.
Even with a few weeks of lower rates, most borrowers have likely already refinanced,
which is why activity has decreased in seven of the last eight weeks,” said
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“The purchase market’s recent slide comes despite a strengthening economy and
labor market. Activity is still above year-ago levels, but accelerating
home-price growth and low inventory has led to a decline in purchase
applications
in four of the last five weeks.” 

The
FHA share of total applications decreased to 10.7 percent from 11.3 percent the
previous week and the VA share increased to 12.2 percent from 11.5 percent. The
USDA share was unchanged at 0.4 percent. Origination balances were down
slightly; the average balance was $330,000, $100 less than the previous week,
while purchase mortgages averaged $400,100 compared to $406,100.

The
average contract interest rate
for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $548,250 decreased to 3.17 percent
from 3.20 percent, with points decreasing to 0.30 from  0.36. The effective rate was 3.26 percent. 

The
rate for jumbo 30-year FRM, loans with balances greater than the conforming
limit, dropped 6 basis points to 3.28 percent while points rose to 0.30 from
0.29. The effective rate dipped to 3.37 percent. 

Thirty-year
FHA backed FRM had an average rate of 3.12 percent with 0.24 point. The prior
week the rate was 3.15 percent with 0.31 point. The effective rate decreased to
3.19 percent.  

The
rate for 15-year FRM fell to 2.55 percent from 2.65 percent, with points declining
to 0.30 from 0.41. The effective rate was 2.63 percent.  

The
5/1 adjustable rate mortgage (ARM) rate dropped to 2.59 percent from 2.67
percent. Points decreased to 0.47 from 0.52 moving the effective rate down to
2.76 percent. The ARM share of activity dipped 0.01 point to 3.5 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.

The latest Forbearance and Call Volume Survey by MBA showed only
a 1 basis point improvement in the share of forborne loans to 4.49 percent. As of
April 18, there were an estimated 2.25 million  homeowners in forbearance plans. By stage,
12.9 percent of them are in their first plan term while 82.4 percent are in a
forbearance extension. The remaining 4.7 percent are re-entries to the various
programs.

The share of Fannie Mae and Freddie
Mac loans was unchanged from the prior week at 2.44 percent. Ginnie Mae (FHA
and VA) loans in forbearance decreased 7 basis points to 6.09 percent, while
the forbearance share for portfolio loans and private-label securities (PLS)
increased by 8 basis points to 8.42 percent. The percentage of loans in IMB
servicer portfolios was the same as the prior week at 4.72 percent, and the
percentage of loans in forbearance for depository servicers declined 3 basis
points to 4.64 percent.

“After two weeks of large declines,
the share of loans in forbearance decreased for the eighth straight week, but
by only 1 basis point. New forbearance requests increased, and the rate of
exits declined,” said Mike Fratantoni, MBA’s Senior Vice President and Chief
Economist. “More than 40 percent of borrowers in forbearance extensions have
now exceeded the 12-month mark.”

Among the homeowners who have exited
forbearance since June 1, 2020, a quarter were borrowers who had continued to make
their monthly payments while in forbearance and 7.5 percent paid off their
loans either by refinancing or selling the home. Another 14.4 percent
reinstated their loans by paying off the accrued past-due amounts.  Other results include 26.9 percent who
accepted a loan deferral or partial claim, 14.6 percent exited with past due balances
and without a loss mitigation plan while 9.6 percent had a loan or trial loan modification
in place. The remaining 1.6 percent opted for repayment plans, short sales,
deeds-in-lieu, or other outcomes.

MBA’s latest Forbearance and Call
Volume Survey covers the period from April 12 through April 18, 2021 and
represents 74 percent of the first-mortgage servicing market (37 million
loans). 

By Jann Swanson , dated 2021-04-28 08:27:12

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Courtesy of Mortgage News Daily

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