The volume of
mortgage applications reversed direction last week, pulling out a small gain
after three straight weeks of declines. 

The Mortgage Bankers Association’s (MBA’s) Weekly Mortgage Applications
Survey for the week ending September 4, was up 2.9 percent on a seasonally
adjusted basis and 2.0 percent unadjusted compared to the previous week.

The Refinancing
Index, which had fallen a cumulative 18 percentage points over the previous three
weeks, gained 3 percent and its share of mortgage activity rose to 63.1 percent
from 62.5 percent of applications. The Refinancing Index was 60 percent higher
than the same week in 2019, but that week had included the Labor Day holiday.

The seasonally
adjusted Purchase Index increased 3 percent from one week earlier and was 0.2
percent higher on an unadjusted basis. The Purchase Index has moved higher in four
of the last five weeks and was 40 percent higher than the same week one year
ago.

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
declined last week, with a noteworthy 5-basis-point decrease in the 15-year
fixed rate to a new record low of 2.62 percent. The drop in rates led to a
rebound in refinancing activity, driven mainly by borrowers applying for
conventional loans
,” said Joel Kan, MBA’s Associate Vice President of Economic
and Industry Forecasting. “Purchase applications were 40 percent higher than
the same week last year, but the increase is skewed higher by being compared to
Labor Day 2019. Nevertheless, there continues to be resiliency in the purchase
market. Applications were up almost 3 percent on a weekly basis and the average
loan size continued to increase, hitting a survey high at $368,600.”

Added Kan,
Highlighting the strong overall demand for buying a home, conventional, VA and
FHA purchase applications all increased last week
.” 

The
FHA and the USDA shares of total applications were unchanged at 10.2 percent and
0.6 percent, respectively while the VA share dipped to 11.2 percent from 11.4
percent the prior week. The average origination balance of mortgage loans
declined by $3,000 to $323,200 while the origination balance of purchase
mortgages rose from $368,000 to $368,600.

Average interest
rates, both contract and effective, were all lower than a week earlier. The
average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan
balances at or below the $510,400 conforming limit decreased to 3.07 percent
from 3.08 percent with points remaining unchanged at 0.36.

The rate for jumbo
30-year FRM, loans with balances exceeding the conforming limit was 3.40
percent with 0.31 point. The prior week the rate was 3.41 percent with 0.38
point.  

Thirty-year FRM backed
by the FHA had an average rate of 3.16 percent, down 3 basis points from the
prior week. Points increased to 0.42 from 0.34.

The average
contract interest rate for 15-year FRM decreased to 2.62 percent from 2.67
percent. Points dropped to 0.33 from 0.36.

The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to
2.99 percent from 3.08 percent, with
points increasing to 0.58 from 0.43. The ARM share of activity decreased from
2.6 percent to 2.2 percent of total applications.

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 another small decrease in the percentage of loans in forbearance plans,
from 7.20 percent to 7.16 percent as of August 30. According to MBA’s estimate, 3.6 million homeowners are in forbearance
plans.

The share of
Fannie Mae and Freddie Mac (GSE) loans in forbearance dropped for the 13th
week in a row to 4.80 percent – an 8-basis-point
improvement.
The share of Ginnie Mae (FHA/VA) loans rose for the second consecutive
week, a 4-basis point increase to 9.62 percent. The forbearance share for
portfolio loans and private-label securities (PLS) decreased 1 basis point to
10.43 percent.

By stage, 35.76
percent of total loans in forbearance are in their initial forbearance term while
63.29 percent are in an extension. The remaining 0.94 percent are forbearance
re-entries.

Depository
servicers’ portfolios had 7.40 percent of loans in forbearance, down 9 basis
points while the percentage of loans in independent mortgage bank (IMB)
servicer portfolios remained unchanged at 7.41 percent.

“The
share of Ginnie Mae loans in forbearance increased again this week, as the
current economic crisis continues to disproportionately impact borrowers with
FHA and VA loans. As a result, IMB servicers, which have roughly one-third of
their portfolio with Ginnie Mae, had a forbearance share that was unchanged,
while depositories, which have a larger share of GSE and portfolio loans, saw a
decrease,” said Mike Fratantoni, MBA’s Senior Vice
President and Chief Economist. “The labor market continued to heal in
August, with strong job growth and a large decline in the unemployment rate.
However, the economy still faces an uphill climb and remains far away from full
employment. High unemployment, and jobless claims consistently around 1 million
a week, continue to cause financial strain for some borrowers -
and especially for those who work in industries
hardest hit by the pandemic.” 

MBA’s latest Forbearance
and Call Volume Survey covers the period from August 24 through August 30 and
represents 75 percent of the first-mortgage servicing market (37.3 million
loans). 

 

By Jann Swanson , dated 2020-09-09 08:11:19

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Courtesy of Mortgage News Daily

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