Application volumes continued to grow during the week ended June 12 as mortgage
rates reached new lows and states allowed more businesses to reopen. The
Mortgage Bankers Association (MBA) said its Market Composite Index, a measure
of application volume, increased 8.0 percent on a seasonally adjusted basis
from one week earlier. On an unadjusted basis, the Index was up 7 percent
compared with the previous week.
The volume of
refinancing applications moved higher for the second straight week. That index
increased 10 percent compared to the week ended June 5 and was 106 percent
higher than the same week one year ago. Refinancing accounted for 63.2 percent
of application activity, up from 61.3 percent the prior week.
adjusted Purchase Index rose for the ninth time, a gain of 4 percent. The
unadjusted Purchase Index increased 2 percent compared with the previous week
and was 21 percent higher than the same week one year ago.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
applications increased to the highest level in over 11 years and for the ninth
consecutive week. The housing market continues to experience the release of
unrealized pent-up demand from earlier this spring, as well as a gradual
improvement in consumer confidence,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “Mortgage rates dropped to
another record low in MBA’s survey, leading to a 10 percent surge in refinance
applications. Refinancing continues to support households’ finances, as
homeowners who refinance are able to gain savings on their monthly mortgage
payments in a still-uncertain period of the economic recovery.”
The FHA share of total
applications decreased to 11.0 percent from 11.5 percent and the VA share was
down to 11.5 percent from 12.3 percent. The USDA share was 0.7 percent. The
loan balances requested in applications were up both overall (from $318,800 to
$325,500) and for purchase loans which increased from $348500 to $354,000.
Interest rates, both contract and effective, declined
for all fixed-rate mortgage (FRM) loans. The average contract interest rate for
30-year FRM with loan balances at or below the conforming limit of $510,400
decreased to 3.30 percent from 3.38 percent, the lowest level in survey history.
Points dipped to 0.29 from 0.30.
average contract interest rate for jumbo 30-year FRM, loans with balances
exceeding the conforming limit, decreased to 3.67 percent from 3.70 percent. Points
rose to 0.28 from 0.26.
The rate for 30-year FRM
backed by the FHA decreased to 3.33 percent with 0.23 point. The previous week
that rate was 3.38 percent, with 0.24
FRM decreased had a contract rate of 2.80 percent, down from 2.83 percent a
week earlier. Points averaged 0.28, up from 0.26.
average contract interest rate for 5/1 adjustable rate mortgages (ARMs)
increased to 3.07 percent from 3.02 percent, points increased to 0.29 from 0.27 and the effective rate was
higher. The share of applications that were for ARMs declined from 3.1 percent
the prior week to 2.8 percent.
MBA’s 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 fee.
MBA also reported an uptick in the number of loans in
forbearance during the week ended June 7. Those loans, totaling 4.3 million,
now represent 8.55 percent of loan servicers’ portfolios, up from 8.53 percent
the previous week.
was a shift in loans by investor type with the forborne share of loans serviced
for the GSEs Fannie Mae and Freddie Mac declining from 6.40 to 6.38 percent
while those in forbearance for portfolio and private-label securities increased
to 10.18 percent of that total from 10.03 percent the prior week. The Ginnie
Mae (FHA/VA/USDA loans) share was unchanged at 11.83 percent. The percentage of
loans in forbearance for depository servicers rose to 9.24 percent, and
increased to 8.43 percent for independent mortgage bank (IMB) servicers
“MBA’s survey results from the first week of June
showed a slight uptick in the overall share of loans in forbearance, but this
increase was primarily driven by a larger share of portfolio and PLS loans in
forbearance. Half of the servicers in our sample saw the forbearance share
decline for at least one investor category,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Although
there continues to be layoffs, the job market does appear to be improving, and
this is likely leading to many borrowers in forbearance deciding to opt out of
Fratantoni, “With June mortgage payments due,
servicers did report the first increase in forbearance requests in two months.
The level of forbearance requests is still quite low, but there was a noticeable
increase in call volume over the course of the week.”
Those requests, as
a percent of servicing portfolio volume, were up across all investor types for
the first time since the week of March 30-April 5, rising from 0.17 percent to
0.19 percent. The increase in weekly servicer call center volume was likely
driven by beginning-of-month payment inquiries and those calls as a percent of
servicing portfolio volume increased from 6.7 percent to 8.0 percent.
MBA’s latest Forbearance
and Call Volume Survey covers the period from June 1 through June 7, 2020 and
represents 76 percent of the first-mortgage servicing market (38.2 million