Mortgage application volume declined
again during the week ended March 12, as refinancing deflated in the face of
rising interest rates. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of that volume, decreased 2.2 percent on a
seasonally adjusted basis from one week earlier and was down 2 percent on an
unadjusted basis.

The Refinance Index
decreased 4 percent from the previous week and was 39 percent lower than the
same week one year ago.
The index has declined in all but three weeks since the
beginning of 2021 and is now 39 percent lower than during the same week in
2020. The refinance share of applications declined to 62.9 percent of total
applications from 64.5 percent the previous week.

Purchase applications
were 2 percent higher than the week ended March 5 on an unadjusted basis and up
3 percent before adjustment. Those applications were up 5 percent from the same
week in 2020
. They have been higher year-over-year every week since the year
began.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
application activity was mixed last week, as the run-up in rates continues to
reduce incentives for potential refinance borrowers. The 30-year fixed rate
increased to its highest level since June 2020, and all other surveyed rates
were either flat or increased,” said Joel Kan, MBA’s Associate Vice President
of Economic and Industry Forecasting. “After reaching a recent high in the last
week of January, the refinance index has since fallen 26 percent to its lowest
level since September 2020. Rates have jumped 36 basis points since the end of
January, and last week refinance activity fell across all loan types.” 

Added
Kan, “The purchase market helped offset the slump in refinances. Activity was
up 5 percent from a year ago, as the recovering job market and demographic
factors drive demand, despite ongoing supply and affordability constraints.”

The
FHA share of total applications increased to 11.7 percent from 11.6 percent the
previous week and the VA share dropped to 10.3 percent from 11.1 percent and the
USDA was unchanged at 0.4 percent. The average balance of both all loans and purchase
loans declined for the third time, all loans from $333,300 to $327,200 and the
balance of a purchase loan was $406,200 compared to $409,900 a week earlier.

The
average contract interest rate for 30-year fixed-rate mortgages (FRM) with
conforming loan balances of $548,250 or less increased to 3.28 percent from
3.26 percent, with points decreasing to 0.41 from 0.43 point. The effective
rate increased to 3.40 percent.  

The
average contract interest rate for jumbo 30-year FRM, loans with loan balances greater
than $548,250, were unchanged at 3.34 percent points declined to 0.40 from 0.50
and the effective rate dipped to 3.46 percent.   

Thirty-year FRM with FHA backing had
an average rate of 3.25 percent with 0.38 point. The prior week the rate was 3.20
percent with 0.37 point.  The effective
rate was 3.36 percent.  

The
rate for 15-year FRM increased to 2.67 percent from 2.63 percent, with points
unchanged at 0.37. The effective rate increased to 2.76 percent.  

The
average contract interest rate for 5/1 adjustable rate mortgages (ARMs)
increased to 2.82 percent from 2.69 percent, with points decreasing to 0.30 from 0.37. The effective rate
increased to 2.90 percent.  The ARM share
of activity decreased to 2.7 percent from 3.0 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.

The
number of loans in forbearance continue to shrink over the last week. MBA
reports that its latest Forbearance and
Call Volume Survey put the number of loans in active plans as of March 7
at an estimated 2.6 million or 5.20 percent of all mortgages in servicer
portfolios. That percentage is down 6 basis points from the previous week. By
stage, 14.1 percent of the remaining loans in forbearance are in their initial
forbearance term while 83.3 percent are in an extension. The remaining 2.6
percent are program  re-entries.

The share of Fannie Mae and Freddie Mac (GSE) loans in
forbearance decreased to 2.88 percent – a 6-basis-point improvement. The share
of Ginnie Mae (FHA and VA) loans decreased 12 basis points to 7.16 percent,
while the forbearance share for portfolio loans and private-label securities
(PLS) was unchanged relative to the prior week at 9.05 percent. The percentage
of forborne loans serviced by  independent mortgage bank (IMB) servicers
decreased 6 basis points to 5.45 percent and those in forbearance by depository
servicers declined 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 2021-03-17 08:40:59

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Courtesy of Mortgage News Daily

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