application volume declined for the first time in four weeks during the week
ended July 24. The Mortgage Bankers Association (MBA) said is Market Composite
Index, a measure of that volume, was down 0.8 percent on a seasonally adjusted
basis from the prior week and down 1 percent before adjustment.
Index dipped 0.4 percent from the previous week although it was still 121
percent higher than the same week in 2019 and made up 65.1 percent of total
applications. The share was 64.8 percent the previous week.
adjusted Purchase Index ticked down 2 percent from one week earlier. The
unadjusted index 1 percent lower week-over-week but up 21 percent on an annual
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
remained near record lows for conventional loans last week, and refinances in
the conventional sector continued to slightly increase. However, rates on FHA
loans rose, leading to an almost 18 percent drop in FHA refinances,” said Mike
Fratantoni, MBA’s Senior Vice President and Chief Economist. “Homebuyers
stepped back slightly, and there was a larger drop in purchase application
volume for FHA, VA, and USDA loans. This trend, along with the fact that
average loan sizes are increasing, indicate that prospective first-time buyers
are being impacted more by the rising economic stress caused by the resurgence
in COVID-19 cases, as well as the uncertainty on how the next round of
government support will take shape.”
FHA share of total applications fell to 9.6 percent from 10.8 percent the previous
week while the VA share rose from 10.8 percent to 11.2 percent. The USDA share was
unchanged from 0.6 percent. The average loan size was $333,000 compared to $328,900
during the week ended July 17 and the size of new home purchase loans rose from
$362,600 to $364,600.
contract and effective, increased for all loan types except for conforming 30-year
fixed-rate mortgages (FRM). The rate for those loans, with origination balances
at or below the conforming limit of $510,400, was unchanged at 3.20 percent.
Points increased to 0.37 from 0.35 and the effective rate increased.
The rate for jumbo 30-year
FRM, loans with balances exceeding the conforming limit, increased to 3.52
percent from 3.51 percent, with
points increasing to 0.30 from 0.29.
Fratantoni noted, rates for 30-year FRM backed by the FHA spiked, rising 14
basis points to 3.27 percent. Points rose to 0.35 from 0.29.
average rate for 15-year FRM increased to 2.76 percent with 0.36 point. The
prior week the rate was 2.71 percent with 0.35 point.
average contract interest rate for 5/1 adjustable rate mortgages (ARMs)
increased to 3.08 percent from 2.89 percent, with points decreasing to 0.11 from 0.12. The ARM share of
activity grew to 3.2 percent of total applications from 3.0 percent in each of
the previous two weeks.
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 said that, while the number of homeowners in
forbearance plans continues to decline, the exodus has been most consistent for
loans serviced for the GSE (Fannie Mae and Freddie Mac) portfolios. The total number and share of active loans
fell during the week ended July 19 for the sixth consecutive week, declining
from 7.80 percent of servicer portfolios to 7.74 percent. MBA estimates there
are now 3.9 million homeowners in forbearance.
The share of GSE loans remaining in plans fell 15
basis points to 5.49 percent. But while the GSE share of forborne loans fell
for the 7th week, the share in the Ginnie Mae portfolio (VA and FHA
loans) rose 1 basis point to 10.27 percent and were up 12 basis points to 10.53
percent among portfolio loans and private labor securities.
“The share of loans in forbearance declined by a
smaller amount than in previous weeks, as the pace of borrowers exiting
forbearance slowed,” said Mike Fratantoni, MBA’s Senior Vice President and
Chief Economist. “Although the GSE portfolio of loans in forbearance should
continue to improve, Ginnie Mae’s portfolio saw an uptick of both loans in
forbearance and borrowers requesting forbearance. The high level of
unemployment claims in recent weeks may be playing a role, as weakness would
likely impact Ginnie Mae’s portfolio first.”
Added Fratantoni, “As a result of large buyouts from
Ginnie Mae pools in recent weeks, many FHA and VA loans are now being held as
portfolio loans by bank servicers. That is why the share of portfolio loans in
forbearance has increased and is now typically at a higher level than that for
Ginnie Mae loans.”
Total weekly forbearance
requests as a percent of servicing portfolio volume (#) remained flat relative
to the prior week at 0.13 percent but calls regarding forbearance increased for
the third week. As a percent of servicing portfolio volume (#) those calls rose
to 9.0 percent from 8.3 percent.
MBA’s latest Forbearance and Call Volume Survey covers
the period from July 13 through July 19 and represents 75 percent of the
first-mortgage servicing market (37.3 million loans).