The volume of mortgage applications fell
back slightly last week. The Mortgage Bankers Association (MBA) said its Market
Composite Index was down 1.9 percent on a seasonally adjusted basis during the
week ended January 15 compared to the prior reporting period. On an unadjusted
basis the index lost 1.0 percent.
The seasonally adjusted Purchase Index rose
3.0 percent from one week earlier and was 9.0 percent higher on an unadjusted
basis. Purchase applications were up 15 percent year-over-year. Those gains
were offset by a 5.0 percent decline in the Refinance Index although it
remained 87 percent higher than during the same week in 2020. Applications for
refinancing composed 72.3 percent of the
total, down from 74.8 percent the previous week.
rates increased across the board last week, with the 30-year fixed rate rising
to 2.92 percent – its highest level since November 2020 – and the 15-year fixed
rate increasing for the first time in seven weeks to 2.48 percent. Market
expectations of a larger than anticipated fiscal relief package, which is
expected to further boost economic growth and lower unemployment, have driven
Treasury yields higher the last two weeks,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “After a post-holiday surge of
refinances, higher rates chipped away at demand. There was a 5 percent drop in
refinance activity, driven by a 13.5 percent pullback in government
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
Added Kan, “Purchase applications remained
strong based on current housing demand, rising over the week and up a
noteworthy 15 percent from last year. Homebuyers in early 2021 continue to seek
newer, larger homes. The average loan size for purchase loans jumped to
$384,000, the second highest level in the survey.”
The FHA share of total applications
decreased to 9.3 percent from 9.6 percent the prior week prior and the VA share
do[[ed to 13.8 percent from 15.8 percent. The USDA share was unchanged at 0.4
percent. The average loan balance was $327,400, up from $323,000 a week earlier.
The average balance of purchase mortgages cited by Kan represented about a
contract interest rate for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $548,250 increased to 2.92 percent
from 2.88 percent, with points ticking up to 0.37 from 0.33. The effective rate
increased to 3.03 percent.
The rate for jumbo 30-year FRM, loans with
balances greater than the conforming limit, added 2 basis points, reaching 3.19
percent. Points were unchanged at 0.28 and the effective rate rose to 3.27
Thirty-year FRM backed by the FHA had an
average rate of 3.01 percent with 0.29 point. The previous week the rate was
2.93 percent with 0.32 point. Effective rates averaged 3.09 percent.
The 15-year FRM’s average rate increased
to 2.48 percent from 2.39 percent and points grew to 0.33 from 0.31. The
effective rate was 2.56 percent.
The rate for 5/1 adjustable-rate mortgages
(ARMs) jumped 11 basis points to 2.76 percent while points declined to 0.31
from 0.38. The effective rate was also higher at 2.88 percent. The ARM share of
activity was to 2.1 percent, up from 1.6 percent the previous 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.
MBA latest Forbearance and Call
Volume Survey put the share of mortgage loans in forbearance at 5.37
percent as of January 10, down from 5.46 percent a week earlier. This translates
to approximately 2.7 million loans. By
stage, 17.27 percent of total loans are in their initial forbearance term while
80.45 percent are in a forbearance extension. The remaining 2.28 percent are reentries
into the program.
share of Fannie Mae and Freddie Mac loans in forbearance decreased 6 basis
points to 3.13 percent and Ginnie Mae (FHA and VA) loans declined 18 basis
points to 7.67 percent. The forbearance share for portfolio loans and private-label
securities (PLS) decreased by 9 basis points to 8.68 percent. The share
serviced by independent mortgage bank (IMB) servicers decreased 13 basis points
from the previous week to 5.79 percent, and the percentage of loans in
forbearance for depository servicers decreased 6 basis point to 5.33 percent.
“The week of January 10th saw the largest – and only the second – decrease in the share of
loans in forbearance in nine weeks, with declines across almost every tracked
loan category,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief
Economist. “The rate of exits from forbearance has picked up a bit
over the past two weeks but remains much lower than what was seen in October
and early November.”
Fratantoni added, “Job market data continue
to indicate weakness, and that means many homeowners who remain unemployed will
need ongoing relief in the form of forbearance. While new forbearance requests
remain relatively low, the availability of relief remains a necessary support
for many homeowners.”
There was an
uptick in the percentage of call center volume related to forbearances, from
7.2 percent to 9.2 percent.
MBA’s latest Forbearance and Call
Volume Survey covers the period from January 4 through January 10, 2021 and
represents 74 percent of the first-mortgage servicing market (37.0 million