Refinancing rebooted
again last week, driving overall mortgage applications volume higher after two
weeks of dwindling volume. The Mortgage Bankers Association (MBA) said its
Market Composite Index, a measure of that volume, increased 6.8 percent on a seasonally
adjusted basis from one week earlier and was 6 percent higher on an unadjusted
basis.

The Refinance
Index jumped by 9 percent
compared to the previous week and was 47 percent
higher than the same week one year ago. Applications for refinancing accounted
for 65.7 percent of the total, up from 63.9 percent the previous week.

The
seasonally adjusted Purchase Index gained 2 percent
from one week earlier and
rose 1 percent before adjustment. Purchase mortgage activity was 22 percent
higher than the same week one year ago.

 

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 fell across the board last week
, as investors grew less optimistic of the
economic rebound given the resurgence of virus cases. Loan types such as the
30-year fixed, 15-year fixed, and jumbo all reached survey lows. Refi activity
responded to these lower rates, with the refi share reaching almost 66 percent
of all applications, its highest level since May.
And the refi index jumped 9
percent, reaching its highest level since April, as both conventional and
government applications for refinances increased. Home purchase activity
continued its strong run with a 2 percent increase over the week and was up
around 22 percent compared to the same week a year ago. While this was still
positive news for the purchase market, the gradual slowdown in the improvement
in the job market and tight housing inventory remain a concern for the coming
months, even as low mortgage rates continue to provide support.”

The FHA share of
total applications increased to 10.4 percent from 9.6 percent the previous week
and the VA share grew to 11.4 percent from 11.2 percent. The USDA share was
unchanged at 0.6 percent. The average loan balance was remained at $326,300
while the average balance of a purchase mortgage declined from $366,500 to $364,300.

Average contract interest rates declined
for all loan products relative to the prior week and effective rates were lower
for those with fixed rates. The rate for 30-year fixed-rate mortgages (FRM)
with conforming loan balances at or below the conforming loan limit of $510,400
decreased to 3.06 percent from 3.14 percent. Points fell to 0.33 from 0.39.

Jumbo 30-year FRM, loans with balances greater
than the conforming limit had an average rate of 3.40 percent with 0.31 point.
The previous week the rate was 3.51 percent
with 0.33 point.  

Thirty-year FRM with
FHA backing had an average rate of 3.23 percent, down 4 basis points from the
prior week. Points fell to 0.33 from 0.42. 

The rate for
15-year FRM decreased to 2.67 percent with 0.35 point. The prior week the rate
was 2.73 percent with 0.37 point.

While the rate for
5/1 adjustable rate mortgages
(ARMs) declined 9 basis points to 3.00 percent,
points jumped to 0.30 from -0.03, driving the effective rate higher. The ARM
share of activity decreased to 2.7 percent of total applications from 3.1
percent.

 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 latest Forbearance and Call
Volume Survey showed the total number of loans now in
forbearance decreased by 23 basis points
from 7.67 percent of servicers’ portfolio volume
in the prior week to 7.44 percent as of August 2, 2020. This would indicate
that 3.7 million homeowners are in forbearance plans. Loans in the initial
stage of forbearance accounted for 40.87 of the total and 58.43 percent are in
a forbearance extension. The remaining 0.70 percent are forbearance re-entries.

The share of
Fannie Mae and Freddie Mac loans in forbearance dropped for the ninth week in a
row to 5.19
percent – a 22-basis-point
improvement. Those serviced for Ginnie Mae (FHA and VA loans) had a forbearance
rate of 10.06 percent, down from 10.28 percent, and the forbearance share for
portfolio loans and private-label securities (PLS) decreased by 25 basis points
to 10.12 percent. Independent mortgage bank servicers – at 7.71 percent – surpassed depository
servicers (7.63 percent) for the highest share of loans in forbearance.

“The share of loans in
forbearance declined at a more rapid pace last week, with many borrowers who
had been making payments while in forbearance deciding to exit. New forbearance
requests increased, but are still well below the level of exits,” said Mike Fratantoni, MBA’s Senior Vice
President and Chief Economist. “Some of the decline in the share of Ginnie Mae loans
in forbearance was due to additional buyouts of delinquent loans from Ginnie
Mae pools, which result in these FHA and VA loans being reported in the
portfolio category.”

Added Fratantoni, “The
job market data in July came in better than expected. However, the unemployment
rate is still quite high, and the elevated level of layoffs and slowing pace of
hiring will make it more difficult for borrowers to get back on track – particularly if there is
not an extension of relief.” 

MBA’s latest Forbearance and Call
Volume Survey covers the period from July 26 through August 2, 2020 and
represents 75 percent of the first-mortgage servicing market (37.3 million
loans). 

By Jann Swanson , dated 2020-08-12 08:52:57

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Courtesy of Mortgage News Daily

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