September 17, 2021

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Mortgage News

Mortgage Application Volume Struggles to Keep up With Hot Housing Market

The volume of mortgage applications lost ground again last week. although the decline was small and the refinancing volume resulted in a small profit. The Mortgage Bankers Association (MBA) announced that the Market Composite Index, a measure of mortgage loan application volume, declined 0.9 percent seasonally for the week ended April 30. On an unadjusted basis, the index was 1 percent below the previous week.

The refinancing index rose 0.1 percent from the previous week, but trailed the index by 17 percent in the same week in 2020. The refinancing share of mortgage activity rose from 60.6 percent in the previous week to 61.0 percent of the total applications.

The seasonally adjusted purchasing index fell by 3 percent and unadjusted by 2 percent. The shopping activity increased compared to the previous week by 24 percent.

Refi Index vs. 30 Years Fixed

Buy index vs. 30 years fixed

“Last week there was mixed action in the mortgage market. Mortgage rates were slightly higher, refinance requests were largely unchanged, and purchase requests were down for the second straight week,” said Joel Kan, associate vice president of Economic and Industry at MBA prognosis. “Both conventional and government purchase requests fell, but average loan sizes increased for each type of loan. This is a sign that the competitive buying market is driven by low housing stocks and high demand. drives up prices and strains activity. The higher prices also have an impact on the activity mix, as purchase credits increase more strongly with above-average balances. ”

Kan added: “An increase in conventional refinancing was offset by a decrease in government refinancing. The 30-year fixed rate rose slightly to 3.18 percent, which is still 22 basis points lower than a year ago, but higher than between mid- 2020 and February 2021. ”

The FHA Share of total applications fell from 10.7 percent in the previous week to 10.1 percent and the VA share from 12.2 percent to 11.9 percent. The USDA stake was unchanged at 0.4 percent. The average loan balance increased from $ 330,100 to $ 337,000, and the account balance for purchase requests increased by $ 8,000 to $ 408,100.

The average contract interest rate For 30-year fixed rate mortgages (FRM) with loan balances at or below the corresponding limit of $ 548,250, the base value increased 1 basis point to 3.18 percent. The points moved from 0.30 to 0.34 and the effective rate was 3.28 percent.

The interest rate on 30-year Jumbo FRM loans with a balance that is above the corresponding limit rose from 3.28 percent to 3.31 percent. The effective rate rose to 3.39 percent.

Thirty-year-old FRMs backed by the FHA had an average rate of 3.13 percent, up 1 basis point from the previous week. The points fell from 0.24 to 0.22 and the effective rate rose to 3.20 percent.

The rate for 15-year-old FRM decreased from 2.55 percent to 2.54 percent. Although the points increased from 0.30 to 0.31, the effective rate decreased to 2.62 percent.

The average contract rate for 5/1 variable rate mortgages (ARM) was 2.76 percent versus 2.59 percent. with points decreasing from 0.47 to 0.23. The effective rate rose to 2.84 percent. The ARM activity share was 3.9 percent of the total requests, up from 3.5 percent the previous week.

MBA’s weekly mortgage application survey has been conducted since 1990 and covers over 75 percent of all US retail consumer applications. Respondents include mortgage lenders, commercial banks, and thrifts. The base period and value for all indices is March 16, 1990 = 100, and the interest information is based on loans with a credit-to-value ratio of 80 percent and points that include the origination fee.

The latest MBA Forbearance and Call Volume Survey found this to be the case As of April 25, 4.47 percent of all loans in service portfolios were indulgent. This is a 2 basis point decrease from the previous week. MBA estimates that 2.23 million homeowners remain on forbearance plans, with 12.8 percent of those loans in their original maturity, while 82.3 percent are in an forebearance period. The remaining 4.9 percent are re-entries into the program.

The Fannie Mae and Freddie Mac loan share of the plans declined 2 points to 2.42 percent, and the Ginnie Mae (FHA and VA) indulgence loan share decreased 7 basis points to 6.02 percent . The leniency rate for portfolio loans and private label securities (PLS) increased 13 basis points to 8.55 percent. The proportion served by independent mortgage lending service providers (IMB) and custody account managers decreased by 2 basis points to 4.70 percent and 4.62 percent, respectively.

“For the ninth straight week, the credit’s share of indulgence declined 2 basis points.

The exit rate has also slowed in the past two weeks This week’s exit rate is at its lowest level since February“said Mike Fratantoni, senior vice president and chief economist of MBA.” The increase in leniency for portfolio and PLS loans underscores both ongoing takeovers of criminal loans from Ginnie Mae pools, as well as increased leniency for other loans not supported nationwide. ”

MBA’s most recent Forbearance and Call Volume Survey covers the period April 19-25, 2021 and represents 74 percent of the market for first mortgage services (37 million loans).