The Mortgage
Bankers Association (MBA) resumed reporting on mortgage applications today
after a two-week holiday hiatus. Information on mortgage volume during the week
ended December 31 is reported relative to the previous report covering the week
ended December 18 but information on mortgage rates and application shares by loan
types are compared to the week ended December 25.

MBA’s Market
Composite Index, a measure of mortgage loan application volume, decreased 4.2
percent
on a seasonally adjusted basis from two weeks earlier. On an unadjusted
basis, the Index decreased 33 percent compared with two weeks ago.

The refinancing
appeared to bounce back from a big loss during the first week of the holiday
season. The Refinancing Index, with an adjustment to account for the holiday, finished
last week down 6.0 percent from its level during the week ended December 18 and
was 100 percent higher than the same week in 2019. During the first week of the
holiday period it had dropped 34 percent. Refinancing applications accounted
for a 72.9 percent share of the week’s activity.

The seasonally
adjusted Purchase Index decreased 0.8 percent from two weeks ago although it
was down 30 percent on an unadjusted basis. The index was 3 percent higher than
the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
started 2021 close to record lows, most notably with the 30-year fixed rate at
2.86 percent, and the 15-year fixed rate at a survey low of 2.40 percent. The
record-low rates for fixed-rate mortgages is good news for borrowers looking to
refinance or buy a home, as around 98 percent of all applications are for
fixed-rate loans,” said Joel Kan, MBA’s Associate Vice President of Economic
and Industry Forecasting. “Despite these low rates, overall application
activity fell sharply during the holiday period
– which is typical every year.
Refinance applications were 6 percent lower than two weeks ago, and purchase
activity less than 1 percent from its pre-holiday level.” 

Added Kan, “The
steady demand for home buying throughout most of 2020 should continue in 2021.
MBA’s is forecasting for purchase originations to rise to $1.59 trillion this
year – an all-time high.” 

The FHA share of
applications was unchanged from the previous week at 10.1 percent while the VA
share rose to 13.6 percent from 12.1 percent. USDA applications accounted for
0.4 percent of the total, up from 0.3 percent the previous week.

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at
or below the conforming limit of $510,400 decreased to 2.86 percent from 2.90
percent, with points increasing to 0.35 from 
0.31. The effective rate declined to 2.99 percent.

The average
contract interest rate for jumbo 30-year FRM, loans with balances below the
conforming rate, dipped 1 basis point to 3.08 percent while points increased to
0.32 from 0.30. The effective rate decreased to 3.18 percent   

Thirty-year FRM
with FHA backing had a rate of 2.90, down from 2.95 percent the previous week.
Points increased to 0.33 from 0.28, putting the effective rate at 3.03 percent.

The rate for
15-year FRM was 2.40 percent with 0.29 point. The prior week the average was
2.42 percent with 0.28 point. The effective rate decreased to 2.49 percent.

The average
contract interest rate for 5/1 adjustable-rate mortgages (ARMs) increased to
2.63 percent from 2.57 percent, with
points decreasing to 0.41 from 0.50. The effective rate increased to 2.75
percent. Two percent of applications during the week we for ARMs.

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 also reported that the percentage of mortgages in active
forbearance plans remained at 5.53 percent
as of December 27. It estimates that
this translates to about 2.7 million loans.

The
share of both Fannie Mae and Freddie Mac (GSE) and portfolio and private label
security (PLS) loans in forbearance dipped 2 basis points to 3.24 percent and
8.87 percent, respectively. However, the share of Ginnie Mae (FHA and VA) loans
rose 5 basis points to 7.92 percent. The percentage of loans served by independent
mortgage banks (IMB) decreased 3 basis points from the previous week to 6.01
percent, and the percentage of loans in forbearance under depository servicers
increased 1 basis point to 5.44 percent. By stage, 18.27 percent of total loans
in forbearance are in the initial forbearance plan stage, while 79.61 percent
are in a forbearance extension. The remaining 2.11 percent are forbearance
re-entries. 

“The share of loans in forbearance remained relatively
unchanged in the final two weeks of 2020
, maintaining the trend of hovering
around 5.5 percent for the last two months. However, the share for Ginnie Mae
loans continues to inch up and is now at its highest level since the week of
November 1st,” said
Mike Fratantoni, MBA’s
Senior Vice President and Chief Economist. “Forbearance requests and
exits both slowed markedly, and servicer call volume dropped sharply over the
holidays.”

Fratantoni
continued, “While the increasing
number of COVID-19 cases continues to slow economic activity, the
passed stimulus legislation should provide financial support for many
households as the vaccine rollout commences.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from December 21 through December 27, 2020 and
represents 74 percent of the first-mortgage servicing market (37.2 million
loans).

 

By Jann Swanson , dated 2021-01-06 09:49:23

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Courtesy of Mortgage News Daily

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