A decline in purchase applications pulled overall volume lower during the
week ended December 4. The Mortgage Bankers Association said its Market
Composite Index declined 1.2 percent on a seasonally adjusted basis but was up 40
percent on an unadjusted basis compared to the previous week. The latter
results had included an adjustment to account for the Thanksgiving holiday.

The Purchase Index
fell by 5.0 percent after adjustment but rebounded by 29 percent afterward when
compared to the holiday week. It was up 22 percent from the same week in 2019.
The Refinance Index increased 2 percent week-over-week and was 89 percent
higher than a year earlier. The refinance share of mortgage activity increased
to 72.0 percent
of total applications from 69.5 percent the previous week.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

Joel Kan, MBA’s
Associate Vice President of Economic and Industry Forecasting provided the
following commentary on the results of MBA’s Weekly Mortgage Applications
Survey. “Refinance activity increased last week in response to mortgage rates
for 30-year, 15-year, and FHA loans hitting their lowest levels in MBA’s survey.
The increase in refinance applications was driven by FHA and VA refinances,
while conventional activity fell slightly.
The ongoing refinance wave has
continued through the fall, with activity last week up 89 percent from a year
ago. The purchase market is also poised to finish 2020 on a strong note.
Applications fell slightly last week but were around 3 percent higher than the
two weeks leading up to Thanksgiving. Reversing the recent trend, there was
also a shift in the composition of purchase applications, with an increase in
government loans pushing the average loan balance lower.”

The
FHA share of total applications increased to 9.9 percent from 9.1 percent the previous
week and the VA share rose to 12.7 percent from 11.9 percent. The USDA share of
total applications was unchanged at 0.4 percent. The balance of mortgages
originated during the week declined, from  $323,300 to $317,800 overall and from $375,200
to $366,100 for purchase mortgages.

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $510,400 decreased to a survey low
of 2.90 percent from 2.92 percent. Points increased to 0.35 from  0.31 and the effective rate decreased.   

Jumbo 30-year FRM, loans with balances greater
than $510,400, had the only rate increase of the week. The contract rate
increased to 3.20 percent from 3.19 percent, with points decreasing to 0.28 from 0.30. The effective rate also increased. 

The rate for
30-year FRM backed by the FHA decreased to a survey low of 2.97 percent from
3.00 percent. Points grew to 0.40 from 0.34 and the effective rate decreased.

Fifteen-year FRM had
a contract rate of 2.51 percent with 0.35 point, a survey low. The previous
rate was 2.53 percent with 0.27 point. The effective rate was unchanged.

The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to
2.60 percent from 2.63 percent, with
points decreasing to 0.40 from 0.47 and the effective rate decreased.  The ARM share of activity decreased to 1.7
percent of total applications from 1.8 percent a week earlier.

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 found the total number of loans now
in forbearance largely unchanged
from the prior week. MBA estimates that, as of
November 29 there 2.8 million homeowners in forbearance plans, 5.54 percent of
those with mortgage loans. By stage, 19.81 percent of total loans in
forbearance are in the initial forbearance plan stage, while 77.90 percent are
in a forbearance extension. The remaining 2.29 percent are forbearance
re-entries.

The
share of Fannie Mae and Freddie Mac loans in plans decreased by 2 basis points to
3.34 percent. Ginnie Mae loans in forbearance increased 6 basis points to 7.89
percent and those serviced for portfolio lenders and private-label securities
(PLS) increased by 7 basis points to 8.70 percent. The percentage of loans in
forbearance for independent mortgage bank (IMB) servicers decreased 1 basis point
from the previous week to 6.02 percent and those for depository servicers
increased 1 basis point from the previous week to 5.48 percent.

“After
two weeks of increases, the share of loans in forbearance was unchanged for the
week that included Thanksgiving. A small decline in forbearances for GSE loans
was offset by increases for Ginnie Mae
and portfolio loans,” said Mike
Fratantoni, MBA’s Senior Vice President and Chief Economist. “While new
forbearance requests declined for the week, exits slowed to a new low for the
series.”

Added Fratantoni,
“The job market data for November showed an economic recovery that was slowing
in response to the latest surge in COVID-19 cases. It is not surprising to see
the rate of forbearance exits slow, as households that needed forbearance
assistance in October may be in even greater need now.”

MBA’s latest Forbearance
and Call Volume Survey covers the period from November 23 through November 29,
2020 and represents 74 percent of the first-mortgage servicing market (37.2
million loans).

By Jann Swanson , dated 2020-12-09 08:13:25

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Courtesy of Mortgage News Daily

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