Even with some
interest rates ticking higher, both purchase and refinance activity increased
last week. The Mortgage Bankers Association (MBA) said its Market Composite
Index, a measure of mortgage loan application volume, increased 4.1 percent on
a seasonally adjusted basis from one week earlier and was up 4.0 percent
unadjusted. It was the third consecutive week of gains.
Refinancing put in
the stronger performance, that index increased 5 percent from the previous week
and was 122 percent higher than the same week in 2019. The refinance share of
mortgage activity rose to 64.8 percent of total applications from 64.2 percent
the previous week.
The Purchase Index
was up 2.0 percent on both an adjusted and unadjusted basis. It was 19 percent
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
applications increased last week despite mixed results from the various rates
tracked in MBA’s survey. The average 30-year fixed rate mortgage rose slightly
to 3.20 percent, but some creditworthy borrowers are being offered rates even
below 3 percent. As a result, these low rates drove a 5 percent weekly gain in
refinances and a robust 122 percent increase from a year ago,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “There
continues to be strong homebuyer demand this summer, as home shoppers have
returned to the market in many states. Purchase activity increased again last
week and was up 19 percent compared to last year – the ninth straight week of
The FHA share and
the VA share of total applications both decreased to 10.8 percent from 11.1
percent and 11.0 percent respectively the previous week. The USDA share was
unchanged from 0.6 percent. The average loan balance during the week was $328,900,
down from $330,600 the prior week and the average for purchase mortgages
increased to $362,500 from $357,000.
contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming
loan balances of $510,400 or less increased to 3.20 percent from 3.19 percent,
with points increasing to 0.35 from 0.33. The effective rate also increased.
Jumbo 30-year FRM,
loans with balances higher than the conforming limit, had an average rate of 3.51
percent with 0.29 point. The prior week the rate was 3.53 percent, also with 0.29
point. The effective rate decreased from last week.
rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.13 percent
from 3.24 percent, with points
unchanged at 0.29. The effective rate declined.
FRM had a rate of 2.71 percent, up 1 basis point from the prior week. Points
rose to 0.35 from 0.32 and the effective rate increased.
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) fell 11
basis points to 2.89 percent while points increased to 0.12 from 0.02. The
effective rate moved lower. The ARM
share of activity was unchanged at 3.0 percent.
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
MBA also reports that
the number of loans in COVID-19 forbearance plans continued to dwindle during
the week ended July 12. The latest Forbearance and Call Volume Survey showed the
share of those loans decreased
by 38 basis points from 8.18 percent of servicers’
the prior week to 7.80 percent. This leaves an estimated 3.9 million homeowners
are in forbearance plans.
The decline affected all servicer
portfolios with the share of Fannie Mae and Freddie Mac loans down for the
sixth straight week to 5.64 percent, a 43-basis-point improvement. Ginnie Mae
loans decreased 30 basis points to 10.26 percent, while the forbearance share
for portfolio loans and private-label securities (PLS) fell 52 basis points to
10.41 percent. The percentage of loans in forbearance for depository servicers
dropped to 8.23 percent, and the percentage of loans in forbearance for
independent mortgage bank (IMB) servicers decreased to 7.83 percent.
“The share of loans
in forbearance dropped to its lowest level in over two months, driven by an
increase in the pace of exits as more homeowners have been able to get back to
work,” said Mike Fratantoni, MBA’s Senior Vice
President and Chief Economist. “The decline in the forbearance share was
broad based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans.”
half of borrowers remaining in forbearance are now in an extension of the
original term, while the remainder are in their initial forbearance plan. The
pace of new forbearance requests remains quite low compared to earlier in the
crisis, but we are watching carefully for any increases due to either the
pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance
benefits at the end of this month.
Call center volume related to forbearances
did pick up, as a percent of servicing portfolio volume (#), those calls
increased from 7.8 percent to 8.3 percent. Total weekly forbearance requests as
a percent of servicing portfolio volume (#) remained flat relative to the prior
week at 0.13 percent.
MBA’s latest Forbearance and
Call Volume Survey covers the period from July 6 through July 12, 2020 and
represents 75 percent of the first-mortgage servicing market (37.3 million