application volume has fallen into an up and down pattern over the last few
weeks and last week went to the negative side. The Mortgage Bankers Association
said its Market Composite Index decreased 4.8 percent on a seasonally adjusted
basis during the week ended September 25 and lost 5 percent on an unadjusted
Index fell by 7 percent but was 52 percent higher than the same week in 2019. Refinancing
continues to dominate the action, although its share of total applications was
down from 64.3 percent during the week ended September 18 to 63.3 percent.
The Purchase Index
decreased 2 percent on both an adjusted and unadjusted basis from the previous
week but was 22 percent higher than the same week one year ago. An unbroken string
of annual increases now dates back to the week ended May 22.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
“First off, we’re not really seeing a big enough drop in either side of the application numbers to label it as anything other than normal volatility in the bigger picture,” according to MBS Live CEO Matt Graham. “But if there is a cause and effect relationship here, it’s that refinance activity is being pulled forward a bit as people have rushed to get applications and locks in before getting hit with the new adverse market fee.“
decreased last week, with the 30-year fixed rate mortgage declining 5 basis
points to 3.05 percent – the lowest in MBA’s survey. Despite the decline in
rates, refinances fell over 6 percent, driven by a 9 percent drop in
conventional refinance applications,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “There are indications that
refinance rates are not decreasing to the same extent as rates for home
purchase loans, and that could explain last week’s decline in refinances. Many
lenders are still operating at full capacity and working through operational
challenges, ultimately limiting the number of applications they are able to
“Purchase applications also decreased last week, but activity was still at a
strong year-over -year growth rate of 22 percent. Even as pent-up demand from
earlier in the year wanes, there continues to be action in the higher price
tiers, with the average loan balance remaining close to an all-time survey
FHA share of total applications increased to 11.4 percent from 10.1 percent the
previous week and the VA share decreased to 11.9 percent from 12.0 percent. The
USDA share of total applications was 0.5 percent. The average size of the week’s
loans was $321100 compared to $324,000
a week earlier. Purchase loans averaged $370700, down from $371,000.
Except for 15-year
fixed-rate mortgages (FRM) both contract and effective rates moved lower. The
average contract interest rate for 30-year FRM with balances at or below the
conforming limit of $510,400 decreased to 3.05 percent from 3.10 percent, with
points increasing to 0.52 from 0.46.
Jumbo 30-year FRM,
loans with origination balances above the conforming limit, had an average rate
of 3.33 percent, down from 3.35 percent the prior week. Points declined to 0.39
The rate for
30-year FRM backed by the FHA decreased
to 3.15 percent with 0.43 point from 3.23 percent with 0.37 point.
rates increased an average of 1 basis point to 2.65 percent. Points grew to 0.49
from 0.47 and the effective rate increased.
contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to
2.95 percent from 3.19 percent, with
points decreasing to 0.55 from 0.64. The ARM share of activity remained
unchanged at 2.2 percent of total applications.
says a further decline in loans serviced for the GSEs, took the total number of
mortgage loans in active forbearance plans down to 3.4 million last week. The
percentage of all loans in plans dropped 6 basis points to 6.93 percent. By
stage, 30.26 percent of total loans in forbearance are in their initial
forbearance plan while 68.37 percent are in a forbearance extension. The
remaining 1.37 percent have reentered their plans.
share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 16th
week in a row to 4.46 percent – a 9-basis-point
improvement. The forborne percentage of Ginnie Mae (FHA/VA) and portfolio/private
label securities (PLS) were both unchanged, at 9.15 percent and 10.52 percent, respectively.
The percentage of loans in forbearance for depository servicers decreased 7
basis points to 7.11 percent, and the percentage of loans in forbearance for
independent mortgage bank (IMB) servicers dipped 3 basis points to 7.23 percent.
share of loans in forbearance continues to decline and is now at a level not
seen since mid-April. Many homeowners with GSE loans are exiting forbearance
into a deferral plan and resuming their original mortgage payment but waiting
to pay the forborne amount until the end of the loan,” said
Mike Fratantoni, MBA’s Senior Vice President
and Chief Economist. “However,
the overall picture is still somewhat of a mixed bag. The recent uptick in forbearance
requests, particularly for those with FHA or VA loans, is leaving the Ginnie
Mae share elevated, as the pace of new requests meets or exceeds the pace of
Added Fratantoni, “The continued churn in the job market is likely
keeping many homeowners who have been in forbearance reluctant to exit, given
the level of economic uncertainty.”
MBA’s latest Forbearance
and Call Volume Survey covers the period from September 14 through September 20
and represents 74 percent of the first-mortgage servicing market (37.1 million