Mortgage application
volume turned lower again this week after longer term rates rose again, pulling
more steam out of refinancing. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of that volume, decreased 1.3 percent on a
seasonally adjusted basis from one week earlier. On an unadjusted basis, the
Index was down 1 percent compared with the previous week. 

The Refinance
Index fell 5 percent from the previous week and was 43 percent lower than the
same week one year ago.
Refinancing still made up the majority of applications
however, a 64.5 percent share compared to 67.5 percent of the volume a week

The seasonally
adjusted Purchase Index rose 7 percent from one week earlier and was 9 percent
higher on an unadjusted basis. Purchase volume was 2 percent greater than the
same week one year ago.


Refi Index vs 30yr Fixed


Purchase Index vs 30yr Fixed


“The 30-year fixed
mortgage rate climbed to 3.26 percent last week, which is the highest since
last July and up 40 basis points since the start of 2021. Signs of faster
economic growth, an improving job market and increased vaccine distribution are
pushing rates higher,” said Joel Kan, MBA’s Associate Vice President of
Economic and Industry Forecasting. “The run-up in mortgage rates continues to
cool demand for refinance applications
. Activity declined last week for the
fourth time in five weeks.”  

Added Kan, “With
the spring buying season at the doorstep, the purchase market had its strongest
showing in four weeks, with gains in both conventional and government
applications. Overall activity was 2.4 percent higher than a year ago, and loan
sizes moderated for the second straight week – potentially a sign that more
first-time buyers are entering the market.” 

The FHA share of total applications decreased to 11.6
percent from 12.1 percent the previous week and the VA share decline to 11.1
percent from 12.3 percent. The USDA share of applications was steady at 0.4
percent. The average mortgage balance dropped from $336,200 to $333,300 and purchase
mortgage balances declined to $409,900 from $412,300.

The average contract interest rate for
30-year fixed-rate mortgages (FRM) with loan balances at or below the
conforming limit of $548,250, increased 3 basis points to 3.26 percent. Points averaged
0.43 compared to 0.48 a week earlier and the effective rate rose to 3.38

30-year FRM, loans with balances above the conforming limit, had an average rate
of 3.34 percent with 0.50 point. The prior week the rate was 3.33 percent with 0.41 point. The effective rate
increased to 3.48 percent. 

The rate for
30-year FRM backed by the FHA increased to 3.20 percent from 3.19 percent, with points increasing to 0.37 from
0.30. The effective rate was 3.31 percent.

Fifteen-year FRM
had an average rate of 2.63 percent, down 1 basis point, and points fell to
0.37 from 0.39. The effective rate declined to 2.73 percent.

The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) dropped from
2.84 percent to 2.69 and points decreased to 0.37 from 0.58. The effective rate
was 2,82 percent. The ARM share of activity ticked up from 2.9 percent to 3.0

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 February 28 showed a 3 basis point decline in the share of
servicer portfolios in forbearance to 5.20 percent. According to MBA’s estimate, 2.6
million homeowners are in forbearance plans with 14.6 of that total in their initial
forbearance plan stage and 82.8 percent in an extension period. The remaining
2.6 percent are program re-entries.   

The share of
Fannie Mae and Freddie Mac (GSE) loans in forbearance also decreased 3 basis
points to 2.94 percent. The Ginnie Mae (FHA and VA) share decreased by 7 basis
points to 7.28 percent, while the forbearance share for portfolio loans and
private-label securities (PLS) increased by 2 basis points to 9.05 percent. The
percentage of forborne loans serviced by independent mortgage bank (IMB)
servicers decreased 6 basis points to 5.51 percent and those in the portfolios
of depository servicers decreased 1 basis point to 5.28.

“There was a small decline in the total share of loans
in forbearance in the last week of February, as the pace of forbearance exits
increased. This continues the trend reported in prior months. Of those homeowners
in forbearance, more than 12 percent were current at the end of February, down
somewhat from the almost 14 percent at the end of January,” said Mike Fratantoni, MBA’s Senior Vice President
and Chief Economist. “The
improving economy, the soon-to-be passed stimulus package, and the many
homeowners in forbearance reaching the 12-month mark of their plan could all
influence the overall forbearance
share in the coming months

Fratantoni added, “Job growth picked up
sharply in February and the unemployment rate decreased, but there are still
almost 10 million people unemployed, with 4.1 million among the long-term
unemployed -
up 125,000 from January. The passage of the American Rescue Plan provides
needed support for homeowners who are continuing to struggle during these
challenging times.”

By Jann Swanson , dated 2021-03-10 08:44:25

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Courtesy of Mortgage News Daily

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