Mortgage applications, both for home purchase and refinancing,
declined for the third straight time during the week ended August 28. The
Mortgage Bankers Association (MBA) said its Market Composite Index, a measure
of loan application volume, lost 2.0 percent on a seasonally adjusted basis
compared to the previous week and was down 3.0 percent on an unadjusted basis.
The Refinance Index was also 3.0 percent lower than
the prior week although it remained up 40 percent year-over-year. The share of
applications that were for refinancing ticked lower, also for the third
straight week, and is now at 62.5 percent.
The seasonally adjusted Purchase Index declined 0.2
percent on an adjusted basis and 3.0 percent unadjusted. It was 28 percent
higher than the same week one year ago.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
conventional and government refinancing activity decreased last week, despite
30-year fixed and 15-year fixed mortgage rates declining to near historical
lows. Mortgage rates have remained below 3.5 percent for five months now, and
it’s possible that refinance demand may be slowing and will not significantly
increase again without another notable drop in rates,” said Joel Kan, MBA’s
Associate Vice President of Economic and Industry Forecasting. “Purchase
applications were essentially unchanged over the week and were 28 percent
higher than a year ago – the 15th straight week of year-over-year
increases. Lenders are reporting that the strong demand for homebuying is
coming from delayed activity from the spring, as well as households seeking
more space in less densely populated areas.”
The FHA share of total
applications decreased to 10.2 percent from 10.5 percent the week prior and the
VA share declined to 11.4 percent from 11.8 percent. The USDA share of total
applications was unchanged at 0.6 percent. The average loan balance of a
mortgage during the week was $326,200, down from $327,900 the previous week and
the size of purchase loans rose to $368,000 from $366,800.
average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $510,400 decreased to 3.08 percent
from 3.11 percent, with points declining to 0.36 from 0.38. The effective rate was
rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit,
was unchanged at 3.41 percent. Points increased to 0.38 from 0.35 and the effective
rate moved lower.
FRM backed by the FHA had an average rate of 3.19 percent with 0.34 point. The
prior week the rate was 3.16 percent with 0.29 point. The effective rate was
average contract interest rate for 15-year FRM decreased to 2.67 percent from
2.70 percent, with points decreasing to 0.36 from 0.39. The effective rate
decreased from last week.
average contract interest rate for 5/1 adjustable rate mortgages (ARMs) declined
by 6 basis points to 3.08 percent, with
points increasing to 0.43 from 0.42 and a lower effective rate. The ARM share
of activity remained at 2.6 percent of total applications.
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 Forbearance and Call
Volume Survey Showed no change in the number of homeowners with
loans in forbearance during the week ended August 23. There were approximately
3.6 million loans in plans, 7.2 percent of active mortgages.
share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 12th
week in a row to 4.88 percent-
a 5-basis-point improvement. But that was offset by a 4-basis point increase in
plans among loans serviced for Ginnie Mae (FHA/VA) to 9.58 percentage. The
forbearance share for portfolio loans and private-label securities (PLS)
increased by 7 basis points to 10.44 percent. The percentage of loans in
forbearance for depository servicers increased to 7.49 percent, and the independent
mortgage bank (IMB) servicers’ share decreased to 7.41 percent.
stage, 36.71 percent of total loans in forbearance are in the initial
forbearance plan stage, while 62.43 percent are in an extension. The remaining
0.86 percent are forbearance re-entries.
“The pace of new
forbearance requests has been relatively flat across investor types, but for
those with GSE loans, the rate of exits from forbearance regularly exceeds the
rate of new requests,” said
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
“The exception in these
trends are borrowers with Ginnie Mae loans. The loss of enhanced unemployment
insurance benefits, coupled with a consistently high rate of layoffs and
uncertainty about the job market, are having a disproportionate impact on FHA
and VA borrowers.”
MBA’s latest Forbearance and Call
Volume Survey covers the period from August 17 through August 23, 2020 and
represents 75 percent of the first-mortgage servicing market (37.3 million loans).