The volume of mortgage applications declined again last week, the fourth
loss out of the six full weeks since the year began
. The Mortgage Bankers Association
(MBA says that its Market Composite Index, a measure of application volume, has
lost an aggregate of 9.6 percent since the week ended January 1. In the most
recent week, which ended February 12, the index was down 5.1 percent on a
seasonally adjusted basis and 4.0 percent before adjustment.

The Refinance Index decreased 5 percent
from the previous week although it remains 51 percent higher than the same week
one year ago.
The refinance share of mortgage activity decreased to 69.3
percent of total applications, from 70.2 percent during the week ended February
5.

The
Purchase Index was down 6 percent on a seasonally adjusted basis and was 1
percent before adjustment. It was 15 percent higher than the same week one year
ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

 

“Expectations of faster economic growth
and inflation continue to push Treasury yields and mortgage rates higher. Since
hitting a survey low in December, the 30-year fixed rate has slowly risen, and
last week climbed to its highest level since November 2020,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “The
uptick in rates has slightly dampened refinance activity, with MBA’s index
falling for the second week in a row, and the overall share dipping below 70
percent for the first time since last October.”  

Added Kan, “The housing market in early
2021 continues to be constrained by low inventory and higher prices.
Conventional and government applications to buy a home declined last week, but
purchase activity overall is still strong – up 15 percent from last year. The
average purchase loan size hit another survey high at $412,200, partly due to a
larger drop in FHA applications, which tend to have smaller than average loan
sizes.”  

The FHA share of total applications
decreased to 9.0 percent from 9.5 percent the previous week and the VA share dipped
13.2 percent from 13.3 percent. The USDA share was unchanged from 0.4 percent. The
average balance of a mortgage increased from $331,400 to $338,200 and the new
record high for purchase mortgages, $412,200, was $10,000 higher than the previous
record a week earlier.

The average contract interest rate for
30-year fixed-rate mortgages (FRM) with origination balances at or below the
conforming limit of $548,250 increased to 2.98 percent from 2.96 percent, and points
increased to 0.43 from  0.36. The effective
rate rose to 3.10 percent. 

The average contract interest rate for jumbo
30-year FRM, loans with balances greater than the conforming limit, was
unchanged at 3.11 percent. Points grew to 0.35 from 0.29 and the effective rate
was 3.21 percent.

The rate for
30-year FRM backed by the FHA decreased to 2.93 percent from 2.97 percent.
Points rose to 0.37 from 0.36 and the effective rate decreased to 3.04 percent.

Fifteen-year
FRM had an average rate of 2.47 percent, down 3 basis points from the prior
week. Points increased to 0.36 from 0.29 and the effective rate decreased to
2.56 percent.

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) was to
2.83 percent, down from 2.92 percent, with
points increasing to 0.70 from 0.36. The effective rate increased to 3.09
percent.  The adjustable-rate mortgage
(ARM) share of activity was 2.4 percent compared to 2.3 percent the previous
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 puts the share of loans now in forbearance at 5.35
percent of servicers’ portfolio
volume, down 6 basis points from the prior week. According to MBA’s estimate, 2.6
million homeowners were in active plans as of February 7. By stage, 16.07 percent
of those loans were in the initial forbearance plan stage, 81.42 percent were
in a forbearance extension, and the remaining 2.51 percent were forbearance
re-entries.

The share of Fannie Mae and Freddie Mac loans in
forbearance decreased to 3.01 percent- a 6-basis-point improvement. The Ginnie Mae share (FHA
and VA loans) fell by 12 basis points to 7.34 percent, while the forbearance
share for portfolio loans and private-label securities (PLS) was unchanged
relative to the prior week at 9.14 percent. The percentage of loans in
forbearance for independent mortgage bank (IMB) servicers decreased 4 basis
points to 5.69 percent, and the depository servicers’ share decreased 10 basis
points to 5.26 percent.

“The share of loans in
forbearance declined to the lowest level since April 5th of last
year, due to decreases in both the GSE and Ginnie Mae portfolios,” said Mike Fratantoni, MBA’s Senior Vice President
and Chief Economist. “Similar
to the trend in recent months, the first week of February showed
a faster pace of exits from forbearance
compared to recent weeks, while new
forbearance requests were unchanged.” 

Fratantoni
added, “2.6 million homeowners
remain in forbearance plans. MBA expects the rollout of the vaccines to boost
economic growth through the course of the year, leading to a stronger job
market and a greater ability for more struggling homeowners to get back on
their feet. We do believe that additional support is needed until they have
regained their jobs and incomes.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from February 1 through February 7, 2021 and
represents 74 percent of the first-mortgage servicing market which totals 37.0
million loans.

By Jann Swanson , dated 2021-02-17 08:15:23

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Courtesy of Mortgage News Daily

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