Mortgage
application volume declined for the third consecutive time during the week ended
March 19 as refinancing continued to retreat. The Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications Survey revealed a 2.5 percent
decrease in the seasonally adjusted Market Composite Index
, a measure of
mortgage loan application volume. The Index was down 2.0 percent before
adjustment.

The Refinance
Index declined 5 percent from the previous week and was 13 percent lower
than the same week one year ago. Refinancing accounted for 60.9 percent of the
week’s applications compared to 62.9 percent during the week ended March 12.

The
Purchase Index increased 3 percent on both an adjusted and unadjusted basis. It
was 26 percent above its level during the same week in 2020.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“The
30-year fixed mortgage rate increased to 3.36 percent last week and has now
risen 50 basis points since the beginning of the year,
in turn shutting off
refinance incentives for many borrowers,” Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting aid. “Refinance activity dropped
to its slowest pace since September 2020, with declines in both conventional
and government applications. Mortgage rates have moved higher in tandem with
Treasury yields, as the outlook continues to improve amidst the faster vaccine
rollout and states easing pandemic-related restrictions.  Purchase applications were strong over the
week, driven both by households seeking more living space and younger households
looking to enter homeownership. The purchase index increased for the fourth
consecutive week and was up 26 percent from last year’s pace. The average
purchase loan balance increased again, both by quickening home-price growth and
a rise in higher-balance conventional applications.” 

Added Kan, “Inadequate housing inventory
continues to put upward pressure on home prices. As both home-price growth and
mortgage rates continue this upward trend, we may see affordability challenges
become more severe if new and existing supply does not significantly pick up
.”

The FHA and USDA
shares of total applications were unchanged at 11.7 percent and 0.4 percent,
respectively while the VA share decreased to 9.8 percent from 10.3 percent. The
average loan size grew to $333,000 from $327,200 the previous week and the
average balance of purchase mortgages increased to $409,300 from $406,200.  

The
average contract interest rate
for 30-year fixed-rate mortgages (FRM) with loan
balances at or below the conforming limit of $548,250 was 3.36 percent, up from
3.28 percent, with points increasing to 0.42 from 0.41.  The effective rate was 3.48 percent.

Jumbo 30-year FRM,
loans with balances exceeding the conforming limit, had an average interest
rate of 3.40 percent with 0.43 point. The prior rate was 3.34 percent with 0.40
point. The effective rate increased to 3.53 percent.

The rate for
30-year FRM backed by the FHA rose 10 basis points to 3.35 percent and points
grew to 0.41 from 0.38. The effective rate increased to 3.47 percent.

Fifteen-year
fixed-rate mortgage had an average rate of 2.72 percent, up from 2.67 percent;
points increased to 0.40 from 0.37. The effective rate increased to 2.82
percent.

The rate for 5/1 adjustable
rate mortgages (ARMs) declined to 2.79 percent from 2.82 percent, while points
increased to 0.44 from 0.30 and the effective rate rose to 2.95 percent. The ARM
share of activity was 3.2 percent of total applications compared to 2.7 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.

The
ranks of loans in forbearance shrank again over the period covered by MBA’s
most recent Forbearance and Call Volume Survey. A 6 basis point decline brought the
share of forborne loans in servicer portfolios down to 5.14 percent
as
of March 7, 2021. According
to MBA’s estimate, 2.6 million homeowners are in forbearance
plans. By stage, 14.1 percent of those loans are in their initial terms while 83.3
percent have received an extension. The remaining 2.6 percent are forbearance
re-entries. 

The
share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased 6
basis points to 2.88 percent. Ginnie Mae (VA and FHA) loans in forbearance fell
12 basis points to 7.16 percent while the forbearance share for portfolio loans
and private-label securities (PLS) was unchanged from the prior week at 9.05
percent. The percentage of loans serviced by independent mortgage banks (IMBs)  decreased 6 basis points to 5.45 percent and
those in depository servicers’ portfolios dropped 9 basis points to 5.19
percent.

“One year after the onset of the pandemic, many
homeowners are approaching 12 months in their forbearance plan. That is likely
why call volume to servicers picked up in the prior week to the highest level
since last April, and forbearance exits increased to their highest level since
January. With new forbearance requests unchanged, the share of loans in
forbearance decreased again,” said
Mike Fratantoni, MBA’s Senior Vice President and
Chief Economist.
“Homeowners with federally
backed loans have access to up to 18 months of forbearance, but they need to
contact their servicer to receive this additional relief.”

Fratantoni added, “The American Rescue Plan
provides needed support for homeowners who are continuing to struggle during
these challenging times, and stimulus payments are being delivered to
households now. We anticipate that this support, along with the improving job
market, will help many homeowners to get back on their feet.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from March 1 through March 7, 2021 and
represents 74 percent of the first-mortgage servicing market (36.8 million
loans).

By Jann Swanson , dated 2021-03-24 08:36:46

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Courtesy of Mortgage News Daily

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