Mortgage
application volume declined during the week ended July 31 even as mortgage
interest rates reached another all-time low.
The Mortgage Bankers Association
(MBA) said its Market Composite Index, a measure of that volume, decreased 5.1
percent on a seasonally adjusted basis from one week earlier and was down 5
percent unadjusted.

Refinancing
took the larger hit.
That index fell 7 percent from the previous week and
accounted for 63.9 percent of all applications, down from 65.1 percent the
prior week. Activity was 84 percent greater than the same week one year ago.

The
Purchase Index decreased 2 percent from one week earlier on both a seasonally
adjusted and a non-adjusted basis. It was 22 percent higher on an annual basis.
 

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

Joel
Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Mortgage
rates dropped to another record low last week, falling below the previous
record set three weeks ago to 3.14 percent. Refinance activity decreased -
despite the decline in rates – but the current pace remains more than 80
percent higher than a year ago when rates were over 4 percent.
MBA’s forecast
calls for rates to remain at these low levels, which will continue to spur
strong refinance activity and offer homeowners relief in the form of lower
monthly mortgage payments during these uncertain economic times.”

“Purchase
applications also fell slightly but were still 20 percent higher than a year
ago and have now risen year-over-year for 11 straight weeks. Purchase loan
balances continued to climb, which is perhaps a sign that the still-weak job
market and tighter credit for government loans are constraining some first-time
homebuyers,” Kan said.

The distribution of applications among loan types was
unchanged from the previous week. The FHA, VA and USDA shares remained at 9.6
percent, 11.2 percent, and 0.6 percent, respectively. The size of all loans declined
to $326,300 from $333,000 while purchase loan amounts rose to $366,500 from $364,600.

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 3.14 percent
from 3.20 percent, with points increasing to 0.39 from 0.37. The effective rate
decreased from last week. 

The
rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit,
averaged 3.51 percent, down 1 basis point from a week earlier. Points increased
to 0.33 from 0.30 and the effective rate moved higher.

The
average contract interest rate for 30-year FRM backed by the FHA was unchanged
at 3.27 percent, with points
increasing to 0.42 from 0.35. The effective rate increased.

Fifteen-year
FRM had an average rate of 2.73 percent with 0.37 point compared to the previous
week’s average of 2.76 percent with 0.36 point. The effective rate also
declined.

The average contract interest rate for 5/1 adjustable
rate mortgages
(ARMs) ticked up 1 basis point to 3.09 percent. Points dropped
to -0.03 from 0.11 and the effective rate decreased.  The adjustable-rate mortgage (ARM) share of
activity dipped to 3.1 percent of total applications from 3.2 percent the prior
week.

MBA’s
Weekly Mortgage Applications Survey 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
most recent Forbearance and Call Volume Survey found that, as of July 26, 3.8
million homeowners were in COVID-19 related forbearance plans. This is 7.74
percent of all servicer portfolios, a 7-basis point decline from the previous
week.

The
share of GSE (Fannie Mae and Freddie Mac) loans in forbearance dropped by 8
basis points to 5.41 percent, the eighth consecutive decline. Loans being
serviced for portfolio lenders and private label securities (PLS) also had fewer
forbearances, down 16 basis points to 10.37 percent of those portfolios. The
Ginnie Mae (FHA and VA) loans forbearance increased by 1 basis point to 10.28
percent.

The
percentage of loans in forbearance by depository servicers dropped to 7.95
percent from 8.06 percent the prior week. Those serviced by independent
mortgage bank (IMB) servicers decreased 4 basis points to 7.81 percent.

“The
share of loans in forbearance declined, but we are now seeing a notable pattern
developing over the past two weeks.
The forbearance share is decreasing for GSE
loans but has slightly increased for Ginnie Mae loans,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief Economist. “The job market has cooled
somewhat over the past few weeks, with layoffs increasing and other indications
that the economic rebound may be losing some steam because of the rising
COVID-19 cases throughout the country. It is therefore not surprising to see
this situation first impact the Ginnie Mae segment of the market.”

Added
Fratantoni, “The higher level of Ginnie Mae loans in forbearance will increase
the amount of payments that servicers must advance. We continue to monitor
servicer liquidity during these challenging times.” 

Requests
for forbearance as a percent of servicing portfolio volume (#) decreased
relative to the prior week from 0.13 percent to 0.10 percent, the lowest level
reported since early March.  Call center
activity regarding forbearance fell from 9.0 percent of total volume to 6.7
percent.

MBA’s
latest Forbearance and Call Volume Survey covers the period from July 20
through July 26, 2020 and represents 75 percent of the first-mortgage servicing
market (37.3 million loans). 

By Jann Swanson , dated 2020-08-05 08:20:02

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Courtesy of Mortgage News Daily

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