Mortgage application volume was relatively flat as the nation eased into the
holiday season. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of that volume, rose 1.1 percent on a seasonally
adjusted basis during the week ended December 11. On an unadjusted basis the
increase was 0.4 percent.
The Refinance Index increased 1.0 percent from the previous week and was 105
percent higher than the same week one year ago. The refinance share of mortgage
activity increased to 72.7 percent of total applications from 72.0 percent the
The Purchase Index rose 2.0 percent on both an adjusted and an unadjusted
basis. Volume was 26 percent higher than during the same week in 2019.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
“U.S. Treasury rates stayed low last week, in part due to uncertainty
over the prospects of additional pandemic-related government stimulus, as well
as concerns about the continued rise in COVID-19 cases across the country.
Mortgage rates as a result fell to another survey low, with the 30-year fixed
mortgage rate dropping five basis points to 2.85 percent,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting.
“Homeowners once again acted on the decline in rates, with refinance
activity rising for the second straight week and up 105 percent from a year
Added Kan, “The ongoing strength in the housing market has carried into
December. Applications to buy a home increased for the fourth time in five
weeks, as both conventional and government segments of the market saw gains.
Government purchase applications rose for the sixth straight week to the
highest level since June – perhaps a sign that more first-time buyers are
entering the market.”
The FHA share of total applications increased to 11.0 percent from 9.9
percent the previous week while VA applications fell to 12.1 percent from 12.7
percent. The USDA share was unchanged at 0.4 percent. The origination balance
of loans averaged $320,600, up from $317,800 the prior week. Purchase mortgage
balances also rose, from $366,100 to $374,700.
The average contract interest rate for 30-year fixed-rate mortgages (FRM)
with loan balances at or below the
conforming limit of $510,400, decreased to a survey low of 2.85 percent from
2.90 percent. Points declined to 0.33 from 0.35. The effective rate averaged
The rate for 30-year jumbo FRM, loans with balances higher than the
conforming limit, was 3.12 percent with 0.33 point. The prior week the rate was
3.20 percent with 0.28 point. The effective rate was 3.22 percent.
Thirty-year FRM backed by the FHA had an average contract rate of 2.96
percent, down 1 basis point from the prior week. Points averaged 0.42, up from 0.40
a week earlier. The effective rate was 3.08 percent.
Fifteen-year FRM had a contract rate of 2.49 percent with 0.29 point, a new
low. The rate the prior week was 2.51 percent with 0.35 point. The effective
rate was 2.56 percent.
The 5/1 adjustable-rate mortgage rate averaged 2.58 percent with 0.36 point
compared to 2.60 percent and 0.40 point. The effective rate was 2.71 percent.
The ARM share of activity increased to 1.8 percent of total applications from 1.7
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’s latest Forbearance and Call Volume Survey
found that, as of December 6, 2.7 million homeowners remained in COVID-19
related forbearance plans. This represents 5.48 percent of total servicer portfolios,
down from 5.54 percent the prior week. By stage, 18.72 percent of total loans
in forbearance are in the initial forbearance plan stage, while 78.72 percent
are in an extension period. The remaining 2.56 percent are re-entries to the
The share of GSE (Fannie Mae and
Freddie Mac) loans in forbearance decreased to 3.26 percent of those combined
portfolios an 8-basis point week-over-week improvement. Ginnie Mae (FHA and VA)
loans in forbearance decreased 21 basis points to a 7.68 percent share, while
the forbearance share for portfolio loans and private-label securities (PLS)
increased 19 basis points to 8.89 percent.
There was a 4-basis
point decline in the share of loans being serviced by independent mortgage
banks (IMB) to 5.98 percent, and the percentage of loans in forbearance for
depository servicers decreased 10 basis points from the previous week to 5.38
percent. As a percent of servicing portfolio volume (#), forbearance calls
increased from the previous week from 5.3 percent to 9.4 percent and
forbearance inquiries grew to 0.12 percent from 0.08 percent.
“The share of loans in forbearance
decreased in the first week of December. However, more borrowers sought relief,
with new forbearance requests reaching their highest level since the week
ending August 2, and servicer call volume hitting its highest level since the
week ending April 19,” said Mike Fratantoni, MBA’s Senior Vice President and
Chief Economist. “Compared to the last two months, more homeowners exiting
forbearance are using a modification – a sign that they have not been able to
fully get back on their feet, even if they are working again.”
Added Fratantoni, “The latest economic data is showing
a slowdown, particularly an increase in layoffs and long-term unemployment.
Coupled with the latest surge in COVID-19 cases, it is not surprising to see
more homeowners seeking relief.”
Of the borrowers who exited forbearance programs from
June 1 to the present, 30.1 percent had made their monthly payments during
their forbearance period and 24.4 percent received a loan deferral or partial
claim. Another 16.3 percent paid back their past due amounts and 7.3 percent of
loans were paid off through refinance or home sale.
Just over 13 percent of borrowers did not make all
their monthly payments and exited without a loss mitigation plan in place while
the remaining 2.0 percent took repayment plans, had short sales, gave a deed-in-lieu,
or had other results.
MBA’s latest Forbearance and Call Volume Survey covers
the period from November 30 through December 6, 2020 and represents 74 percent
of the first-mortgage servicing market (37.1 million loans).