There was a significant
pull-back in the volume of mortgage applications
during the week ended January
22. Volume has been down in two of the three full weeks of the new year. The
Mortgage Bankers Association (MBA) said its Market Composite Index, a measure
of mortgage loan application volume, declined 4.1 percent on a seasonally
adjusted basis from one week earlier and was 3.0 percent lower on an unadjusted
basis.

The Refinance
Index was 5 percent lower
than during the week ended January 15, although it outpaced
the same week in 2020 by 83 percent. The refinance share of mortgage activity
decreased to 70.7 percent from 72.3 percent the previous week.

The seasonally
adjusted Purchase Index decreased 4 percent from one week earlier and was down
3 percent on an unadjusted basis. Purchase activity was 16 percent higher than
the same week in 2020.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
were mixed last week, with the 30-year fixed rate rising to its highest level
since November 2020 at 2.95 percent, and all other rates in the survey posting
a decline. In a sign that borrowers are increasingly more sensitive to higher
rates
, large declines in government purchase applications and refinance
applications pulled overall activity lower. The refinance index has now
declined for two straight weeks, but is still 83 percent higher than last
year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry.
“Purchase applications also decreased last week, but the impressive trend of
year-over-year growth since the second half of 2020 has continued in early
2021. Activity was up 16 percent from a year ago, and the average purchase loan
amount hit another record high of $395,200. Since hitting a recent low in April
2020, the average purchase loan amount has steadily risen – in line with the
accelerating home-price appreciation occurring in most of the country because
of strong demand and extremely low inventory levels.”

The FHA share of
total applications
increased to 9.4 percent from 9.3 percent the previous week
and the VA share dropped to 12.4 percent from 13.8 percent. The USDA share of
total applications rose to 0.5 percent from 0.4 percent. The average mortgage balance
increased from $327,400 to $329,700 and the balance of purchase mortgages rose
to $395,200 from $384,000.  

The average contract interest rate for
30-year fixed-rate mortgages (FRM) with balances at or below the conforming
limit of $548,250 increased to 2.95 percent from 2.92 percent, with points
decreasing to 0.32 from 0.37. The effective rate was 3.04 percent.   

The average contract interest rate for
jumbo 30-year FRM, loans with balances exceeding the conforming limit, decreased
to 3.17 percent from 3.19 percent, with
points increasing to 0.31 from 0.28. The effective rate decreased to 3.26
percent.   

Thirty-year FRM with
FHA backing had an average rate of 2.88 with 0.34 point. The prior week the
rate was 3.01 percent with 0.29 point. The effective rate decreased to 2.98
percent.

The rate for 15-year fixed-rate mortgages
decreased 5 basis points
to 2.43 percent and points declined to 0.32 from 0.33.
The effective rate was 2.51 percent.

The rate for 5/1 adjustable-rate mortgages
(ARMs) decreased to 2.60 percent from 2.76 percent, with points increasing to 0.38 from 0.31. The effective rate
decreased to 2.74 percent.  The
adjustable-rate mortgage (ARM) share of activity increased to 2.2 percent of
total applications from 2.1 percent a week earlier.

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 Mortgage
Bankers Association’s (MBA)
latest Forbearance and Call
Volume Survey puts the total number of loans now in forbearance
at 2.7 million. This represents 5.37 percent of loans in servicers’ portfolios as of January 17
at 5.38
percent, a slight uptick from 4.37 percent the previous week. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased by 2 basis
points to 3.11 percent. Ginnie Mae (FHA and VA) loans in forbearance decreased
6 basis points to 7.61 percent, while the forbearance share for portfolio loans
and private-label securities (PLS) increased by 26 basis points to 8.94 percent.
The percentage of forborne loans serviced by independent mortgage banks (IMB)
was unchanged relative to the prior week at 5.79 percent, and the percentage serviced
by depository servicers increased 3 basis points to 5.36 percent. By stage,
18.17 percent of total loans in forbearance are in the initial forbearance plan
stage, 79.31 percent are in an extension and 2.52 percent are forbearance
re-entries. 

“The small increase in the
share of loans in forbearance was led by a gain in the portfolio/PLS loan
segment. The good news is that the forbearance numbers for GSE loans continues
to decline more consistently, as these borrowers typically have stronger credit
and more stable employment,”
said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The
rate of exits from forbearance slowed in the prior week, while the rate of new
forbearance requests remained steady at a low level.
” 

Fratantoni added, “The latest housing market
data show strong momentum entering 2021, with both the pace of home sales and
new construction booming. We expect that this strong market could benefit
homeowners who need to sell their home, as record-low inventory is causing
for-sale homes to go under contract quickly and is pushing up home prices.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from January 11 through January 17, 2021 and
represents 74 percent of the first-mortgage servicing market (37.0 million
loans).

 

 

By Jann Swanson , dated 2021-01-27 08:26:15

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Courtesy of Mortgage News Daily

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