It
was a typical first-work-week-after-the holiday bounce for the mortgage indexes,
although the surge was significantly more restrained than last year. Perhaps the
nation was otherwise distracted.

The
Mortgage Bankers Association (MBA) said its Market Composite Index, a measure
of mortgage loan application volume, increased 16.7 percent on a seasonally
adjusted basis during the week ended January 8. During the first week of 2020
the increase was over 30 percent. On an unadjusted basis, the index was up 69
percent.

The
Refinance Index increased 20 percent from the previous week, less than half the
2020 post-holiday recovery. The Refinance Index is 93 percent higher than a
year ago and the refinance share of total applications rose to 74.8 percent of
total applications from 73.5 percent the previous week.

The
seasonally adjusted Purchase Index gained 8 percent from one week earlier
(versus 16 percent last year) and the unadjusted Index was up 60 percent
week-over-week and was 10 percent higher than the same week in 2019.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

 

The
FHA share of total applications decreased to 9.6 percent from 10.1 percent the
week prior while the VA share increased to 15.8 percent from 13.6 percent. The
USDA share of total applications remained unchanged from 0.4 percent the week
prior.

The
average balance of a mortgage during the week declined from $320,300 from
$322,800 the previous week. The balance of purchase mortgages was down from
$378,500 to $374,700.

“Booming
refinance activity in the first full week of 2021 caused mortgage applications
to surge to their highest level since March 2020, despite most mortgage rates
in the survey rising last week. The expectation of additional fiscal stimulus
from the incoming administration, and the rollout of vaccines improving the
outlook, drove Treasury yields and rates higher. The 30-year fixed mortgage
rate climbed two basis points to 2.88 percent, but reversing the trend, the
15-year fixed rate ticked down to 2.39 percent – a record low,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “Even with
the rise in mortgage rates, refinancing did not slow to begin the year
, with
the index hitting its highest level since last March. Both conventional and
government refinance applications increased, with applications for government
loans having their strongest week since June 2012.”

Added
Kan, “Sustained housing demand continued to support purchase growth, with
activity up nearly 10 percent from a year ago. The lower average loan balance
observed was partly due to a 9.2 percent increase in FHA applications, which is
a positive sign of more lower-income and first-time buyers returning to the
market.”  

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at
or below the new conforming limit of $548,250 increased to 2.88 percent from
2.86 percent. Points decreased to 0.33 from 0.35 and the effective rate moved up
to 2.97 percent. 

The
average contract interest rate for jumbo 30-year FRM, loans with balances
exceeding the conforming limit, increased to 3.17 percent from 3.08 percent, with points decreasing to 0.28 from
0.32  The effective rate was 3.25 percent.

The
rate for FHA-backed 30-year FRM grew to 2.93 percent from 2.90 percent, while points declined to 0.32 from
0.33. The effective rate was 3.03 percent.  

Fifteen-year
FRM had a rate of 2.39 percent with 0.31 point. The prior week the average was
2.40 percent with 0.29 point. The effective rate was unchanged at 2.47 percent.
 

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) increased
to 2.66 percent from 2.63 percent, with
points decreasing to 0.38 from 0.41. The effective rate moved up to 2.80 percent.
The ARM share of activity shrunk from 2.0 percent to 1.6 percent.

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 Forbearance
and Call Volume Survey for the week ended January 3 showed a 7-basis point decline
in the share of forbearance plans
to 5.46 percent of loans in servicer
portfolios. This translates to an estimated 2.7 million loans. By
stage, 18.49 percent of total loans in forbearance are in their initial
forbearance plan and 79.85 percent are in an extension. The remaining 1.66
percent are plan re-entries. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.19
percent – a 5-basis-point
improvement. The share of Ginnie Mae (FHA/VA) loans decreased 7 basis points to
7.85 percent, and the forbearance share for portfolio loans and private-label
securities (PLS) fell 10 basis points to 8.77 percent. The percentage of forborne
loans in independent mortgage bank (IMB) servicer portfolios declined by 9
basis points to 5.92 percent, and the forbearance share for depository
servicers decreased 5 basis point to 5.39 percent.

“The share of loans in forbearance slightly declined
for each investor category entering the new year, remaining within the narrow
range observed for the last two months,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The
data show that those homeowners who remain in forbearance are more likely to be
in distress, with fewer continuing to make any payments and fewer exiting
forbearance each month. Those borrowers who do exit are also more likely to
require a modification
to their ongoing repayment plans.” 

Fratantoni continued, “Surging COVID-19 cases
caused economic activity to stall in December, with a monthly job loss for the
first time since April, and with those jobs mostly concentrated in the leisure
and hospitality sector. We expect that this slowdown will prevent any rapid
improvement in the forbearance numbers over the next few months.” Total weekly forbearance
requests as a percent of servicing portfolio volume (#) increased relative to
the prior week from 0.06 percent to 0.07 percent.

Twenty-nine
percent of the cumulative forbearance exits from June 1, 2020, through January
3, 2021 were borrowers who had continued to make monthly payments while in
forbearance. Borrowers exited with a loan deferral or partial claim in 25.1
percent of cases and 15.9 percent reimbursed past-due amounts. Thirteen percent
existed forbearance in delinquency and without a loss mitigation plan. Those
with a modification or trial modification and those that paid of the loan
through sale or refinance each represented 7.4 percent of total exits. The remaining
1.8 percent resulted in repayment plans, short sales, a deed-in-lieu, or other
resolutions.  

MBA’s latest Forbearance and Call
Volume Survey covers the period from December 28, 2020, through January 3,
2021, and represents 74 percent of the first-mortgage servicing market which is
estimated at 37.1 million loans.

By Jann Swanson , dated 2021-01-13 08:29:39

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Courtesy of Mortgage News Daily

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