Mortgage application
volume rose slightly
during the week ended October 23. The Mortgage Bankers
Association (MBA) said its Market Composite Index, a measure of that volume,
increased 1.7 percent on a seasonally adjusted basis from one week earlier, its
first increase in three weeks. On an unadjusted basis, the Index was 2.0
percent higher.

The
Refinance Index gained 3 percent from the previous week’s level and was 80
percent higher than the same week one year ago. The refinance share of mortgage
activity increased to 66.7 percent of total applications from 66.1 percent the
previous week.

The
Purchase Index was up 0.2 percent on a seasonally adjusted basis. Even if fractional,
it was the first uptick in that index since the week ended September 18. The Index
dipped 0.3 percent unadjusted but was 24 percent higher than the same week in
2019.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage applications to buy a home were
flat compared to the prior week, but overall activity remains strong this fall.
Applications jumped 24 percent compared to last year, and the average [purchase]
loan size reached another record high at $372,600. These results highlight just
how strong the upper end of the market is right now, with outsized growth rates
in the higher loan size categories. Furthermore, housing inventory shortages
have pushed national home prices considerably higher on an annual basis,” said
Joel Kan, MBA’s Associative Vice President of Economic and Industry
Forecasting. “Refinance activity has been somewhat volatile over the past few
months but did increase almost 3 percent last week. With the 30-year fixed rate
at MBA’s all-time survey low of 3.00 percent, conventional refinances rose 5
percent. However, the government refinance index decreased for the first time
in a month, driven by a slowdown in VA refinance activity.” 

The FHA share of
total applications decreased 1 percentage point to 11.7 percent and the VA
share fell to 11.4 percent from 12.6 percent. The USDA share was unchanged at 0.5
percent. In addition to the record high size of purchase loans, the average size
of all loans increased from $320,400 to $322,900.

Interest rates, both contract and
effective, were mixed across loan types. The average contract interest rate for
30-year fixed-rate mortgages (FRM) with balances at or below the conforming
limit of $510,400 decreased to 3.00 percent from 3.02 percent. Points dipped to
0.35 from  0.36 and the effective rate
moved lower.   

The rate for jumbo 30-year FRM, loans with
balances that exceed the conforming limit, decreased to 3.28 percent from 3.33
percent while points increased to 0.31 from 0.30. The effective rate decreased.
   

The average
contract interest rate for 30-year FRM backed by the FHA increased to 3.14
percent from 3.12 percent. Points were unchanged at 0.35 and the effective rate
increased.  

Fifteen-year FRM had an average rate of 2.60
percent with 0.37 point. The prior week the rate was 2.61 percent with 0.31
point. The effective rate was unchanged from last week.

The average contract interest rate for 5/1
adjustable rate mortgages (ARMs) jumped to 3.05 percent with 0.64 point from
2.86 percent with 0.58 point and the effect rate increased. The ARM share of
activity increased to 2.1 percent of total applications from 1.9 percent the
prior week.

MBA’s
Weekly Mortgage Applications Survey has 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
a small decline of 2 basis points in the number of loans in forbearance. A 5.92
percent share of total servicer portfolios remained in active plans in plans as
of October 18. This translates to about 3.0 million loans.  

The share of the Fannie
Mae and Freddie Mac (the GSEs’) portfolios in forbearance dropped for the 20th
week in a row to 3.72 percent, a 5-basis-point improvement. Ginnie Mae (VA/FHA)
loans in forbearance increased 3 basis points to 8.17 percent, and the forbearance
share for portfolio loans and private-label securities (PLS) increased by 4
basis points to 8.90 percent.  The
percentage of loans serviced by independent mortgage bank (IMB) servicers
increased 2 basis points to 6.35 percent, while the share of those in depository
servicers’ portfolios decreased 7 basis points to 5.86 percent.

By
stage, 25.02 percent of total loans in forbearance are in the initial
forbearance plan stage, while 73.14 percent are in a forbearance extension. The
remaining 1.84 percent are re-entries into plans.

“The share of loans in
forbearance declined only slightly in the prior week, after two weeks of a
flurry of borrowers exiting as they reached the six-month mark,” said Mike Fratantoni, MBA’s Senior Vice
President and Chief Economist. “There continues to be a
steady improvement for Fannie Mae and Freddie Mac loans, but the forbearance
share for Ginnie Mae, portfolio, and PLS loans all increased. This is further
evidence of the unevenness in the current economic recovery. The housing market
is booming, as shown by the extremely strong pace of home sales last week.
However, many homeowners continue to struggle, as the pace of the job market’s improvement has waned.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from October 12 through October 18, 2020 and
represents 75 percent of the first-mortgage servicing market (37.3 million
loans).

By Jann Swanson , dated 2020-10-28 11:43:48

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Courtesy of Mortgage News Daily

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