Refinancing continues to support mortgage application activity, while purchase applications continued to weaken in the week ending July 23rd. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of the volume of mortgage loan applications, rose a seasonally adjusted 5.7 percent from the previous week and its unadjusted index rose 6 percent.
The refinancing index rose by 9 percent although it was 10 percent below the level a year ago the same week. The refinancing share of mortgage activities rose from 64.9 percent in the previous week to 67.2 percent of the total applications.
The seasonally adjusted Purchase index down by 2 percent and the unadjusted purchase index fell 1 percent compared to the previous week. The latter was 18 percent lower than the same week in 2020.
Refi-Index vs. 30 years fixed
Purchase index vs. 30 years fix
“10-year government bond yields fell last week as investors were concerned about the rising number of COVID-19 cases and the downside risks to the current economic recovery. Refinance requests rose as the 30-year fixed-rate mortgage rate fell to its lowest level since February 2021, and the 15-year rate fell to another record low from 1990, “said Joel Kan, associate vice president of Economic and Industry Forecasting at MBA. “Refinances for conventional loans rose over 11 percent. In over 95 percent of refinancing applications for fixed-rate mortgages, Borrowers are looking for a lower interest rate for the life of their loan.”
Kan added, “The purchase index has fallen to its lowest level since May 2020 for the second straight week and has now declined over the past three months on an annualized basis. Extremely high property prices continue to discourage and soar potential buyers The FHFA reported yesterday that home prices were 18 percent higher in May than a year ago, continuing a seven-month trend of unprecedented increases in home prices. ”
The FHA Share of total applications
fell from 9.6 percent to 9.1 percent and the VA share from 10.5 percent to 9.8 percent. The USDA share was unchanged at 0.5 percent. The average loan amount increased from $ 343,800 to $ 357,700 and the purchase loan increased from $ 401,300 to $ 404,200.
That average contract interest rate for 30 year fixed rate mortgages (FRM) with corresponding loan balances of $ 548,250 or less decreased from 3.11 to 3.01 percent and from 0.43 to 0.34. The effective interest rate was 3.11 percent.
The interest rate on 30-year Jumbo FRM loans with balances above the compliant limit decreased from 3.13 percent to 3.11 percent. The points decreased from 0.32 to 0.27 and the effective rate decreased to 3.19 percent.
Thirty-year FRM with FHA support had a rate of 3.03 percent with 0.35 points. In the previous week the rate was 3.08 percent with 0.31 points. The effective interest rate fell to 3.14 percent.
The average rate for 15-year-old FRM was 2.36 percent, the lowest in the history of the survey, 10 basis points lower than the previous week. The points were unchanged at 0.30 and the effective rate was 2.44 percent.
The interest rate on 5/1 variable rate mortgages (ARMs) jumped from 2.74 percent to 2.81 percent.
with the points increasing from 0.19 to 0.23. The effective interest rate increased to 2.90 percent. The activity share of ARM rose to 3.6 percent of the total requests from 3.3 percent in the previous week.
The MBA’s weekly mortgage application survey has been conducted since 1990 and covers more than 75 percent of all US retail applications. The respondents include mortgage banks, commercial banks and savings banks. The base period and value for all indices is March 16, 1990 = 100 and the interest rate information is based on loans with a LTV of 80 percent and points that include the issue fee.
MBA’s latest Forbearance and Call Volume Survey shows a 2 basis point decrease in the number of deferred loans in the week ending July 18. There are currently approximately 1.74 million homeowners in active plans, about 3.50 percent of the total in servicer portfolios. After stages, 9.8 percent of these loans are in the initial deferral plan phase, 83.2 percent are in the process of being extended and 7 percent are re-admissions.
The share of Fannie Mae and Freddie Mac Forbearance loans decreased 2 basis points to 1.81 percent of those portfolios. Ginnie Mae (FHA / VA) loans decreased 1 basis point to 4.35 percent, while the forbearance rate for portfolio loans and private label securities (PLS) increased 5 basis points to 7.38 percent. The percentage of deferred loans serviced by Independent Mortgage Lenders (IMB) remained the same at 3.68 percent from the previous week, and those in custodian portfolios decreased 1 basis point to 3.61 percent.
“As is typical for mid-month reporting, forbearance exits slowed and there was a slight increase in new applications. The net result was a small decrease in the proportion of forbearance loans – the 21stNS
Week of declines, “said Mike Fratantoni, senior vice president and chief economist of the MBA.
MBA’s latest Forbearance and Call Volume Survey covers the period July 12 through July 18, 2021 and represents 74 percent of the $ 36.9 million.