Mortgage Apps: Refi Apps Rebound, Forbearance Jumps

April 15, 2020
Bottom Line: The average 30-year fixed-rate mortgage held below 3.5% for the third straight week. Like all businesses banks are adjusting to many employees "working from home" and other adjusted work structures. Amid potential forbearance of mortgage payments and massive demand for Paycheck Protection Program ("PPP") loans in which banks act as a conduit and credit check for Small Business Administration loans that are now funded by the Federal Reserve, banks were able to take more mortgage refinancing applications last week. Mortgage purchase applications were still depressed with the purchase index at its lowest level in five years. While realtors were deemed "essential" and able to work through shelter-in-place restrictions in some regions, activity remains extremely depressed for now. Finally, earlier this week the Mortgage Bankers Association released the early results of its mortgage servicer Forbearance and Call Volume Survey. From March 30 to April 5 alone, the total number of loans in forbearance jumped from 2.73 - 3.74%. The survey covers over 50% of the first-mortgage servicing market (nearly 27 million loans) and will increase in the coming weeks as more servicers respond to the survey. The number of loan in forbearance will likely increase sharply in the next week, and then we'd expect another sharp increase as May payments come due. The MBA Mortgage Applications Index ROSE by 7.3% during the week ended April 10 to 770.7, slightly below its 13 week average of 773.1 but 67.9% ABOVE its year-ago level. The Purchase Index FELL by 1.8% to 182.6, sharply below its 13 week average of 256.6 and 34.9% BELOW its year-ago level. The Refinance Index ROSE by 10.1% to 4,243. Despite this increase, refinancing activity is sharply above its 13 week average of 3,789 and 192.0% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate declining by 4 bps to 3.45% and the 15-year fixed rate was unchanged at 3.04%. Key findings of MBA's Forbearance and Call Volume Survey - March 30 to April 5, 2020
  • Total loans in forbearance grew relative to the prior week from 2.73% to 3.74%. For the week of March 2, only 0.25% of all loans were in forbearance.
    • By investor type, Ginnie Mae loans grew the most relative to the prior week: from 4.31% to 5.89%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 1.69% to 2.44%.
  • Forbearance requests as a percent of servicing portfolio volume (#) rose relative to the prior week to 2.43% from 1.36%.
  • Weekly servicer call center volume
    • As a percent of servicing portfolio volume (#), calls rose from 11.6% to 14.4%
    • Hold times decreased from 13.0 minutes to 10.3 minutes
    • Abandonment rates declined from 21% to 17%
    • Average call length rose from 7.3 minutes to 7.5 minutes
  • Loans in forbearance as a share of servicing portfolio volume (#) as of April 5, 2020:
    • Total: 3.74% (previous week: 2.73%)
    • IMBs: 4.17% (previous week: 3.45%)
    • Banks: 3.63% (previous week: 2.24%)