Mortgage Funding Applications decreased again in the week of September 3rd. The Mortgage Bankers Association (MBA) announced that its Market Composite Index, a measure of application volume, was down 1.9 percent on Labor Day weekend seasonally adjusted and 3 percent unadjusted.
The refinancing index fell by 3 percent compared to the previous week and was 4 percent below the volume a year ago. The refinancing applications made up 66.8 percent of the total volume, unchanged from the previous week.
The volume of purchase mortgages fell slightly after seasonal adjustment Purchase index down by 0.2 percent. The unadjusted version was 3 percent lower weekly and 18 percent lower than the same week in 2020.
Refi-Index vs. 30 years fixed
Purchase index vs. 30 years fix
“Mortgage application volume fell to its lowest level since mid-July last week, as mortgage rates have remained just above 3 percent for several weeks,” said Mike Fratantoni, senior vice president and chief economist of the MBA. with slower employment growth but a further decline in the unemployment rate in August. We expect further improvements by the end of the year will lead to a curb on the Fed’s MBS purchases, which should put some upward pressure on “mortgage rates.”
The FHA share of total applications decreased from 11.2 percent to 10.9 percent, while the VA share rose from 9.7 percent to 10.4 percent and the USDA share remained unchanged at 0.5 percent. The average loan size decreased from $ 335,900 to $ 329,200 and the purchase mortgage size decreased from $ 395,500 to $ 389,800
the average interest rate for fixed-rate mortgages (FRM) hardly changed compared to the previous week, while the variable interest rates remained volatile. The average contract rate for 30-year FRMs with origination balances at or below the compliant limit of $ 548,250 or less remained unchanged at 3.03 percent, with scores decreasing from 0.34 to 0.33. The effective interest rate fell to 3.12 percent.
The interest rate on 30-year Jumbo FRM, loans with balances above the compliant limit, increased one basis point to 3.14 percent and rose from 0.26 to 0.30. The effective interest rate was 3.23 percent.
The contract rate for 30 year FRM supported by the FHA decreased from 3.09 percent to 3.07 percent, while the points increased from 0.25 to 0.30. The effective interest rate fell to 3.15 percent.
Fifteen year old FRM had an average rate of 2.37 percent with 0.26 points. In the previous week the rate was 2.39 percent at 0.30 points. The effective interest rate fell to 2.43 percent.
The rate for 5/1 ARMs decreased from 2.80 percent to 2.56 percent. with the points increasing from 0.13 to 0.17. The effective interest rate fell to 2.62 percent. The activity share of ARM fell from 3.2 percent to 2.5 percent of the total applications, the lowest percentage since the beginning of February.
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.
The latest MBA survey on Forbearance and Call Volume shows a tiny decrease from the previous week in the percentage of loans deferred. That percentage decreased 2 basis points to 3.23 percent as of August 29. According to the MBA estimate, 1.6 million homeowners are on deferral plans, of which 10.6 percent are in the initial deferral plan phase, 81.2 percent are in a deferral extension, and the remaining 8.2 percent represent re-entries into the program.
The Fannie Mae and Freddie Mac loan share of the forbearance decreased 3 basis points to 1.63 percent. The Ginnie Mae (FHA and VA) share decreased 29 basis points to 3.63 percent and the share of portfolio loans and those in private label securities (PLS) rose 34 basis points to 7.52 percent. Forborne loans serviced by Independent Mortgage Lenders (IMB) decreased 1 basis point to 3.49 percent and there was a 2 basis point decrease in those serviced by custodians to 3.33 percent.
“The proportion of tolerated loans declined two basis points last week, with both new applications and exits being slow through the end of August,” said Mike Fratantoni, senior vice president and chief economist of MBA. “There has been another major shift in the location of many of the FHA and VA loans bought from Ginnie Mae pools and moved onto servicers’ balance sheets. As a result, the proportion of Ginnie Mae loans in Forbearance has dropped sharply.” and a compensatory increase in the proportion of portfolio loans in deferral. These buyouts allow servicers to stop advances on principal and interest payments, and Work with borrowers to start paying again before they go back to Ginnie Mae pools. ”
MBA’s latest Forbearance and Call Volume Survey covers the period August 23 through August 29 and represents 74 percent of the first mortgage market (36.9 million loans).