Mortgage Apps: Purchase Rise Again, Refis Join Gains
June 10, 2020
Bottom Line: Eight weeks of gains in the purchase applications offered more signs that the housing market will be a source of strength in the recovery from the shutdowns for the novel coronavirus. The average 30-year fixed-rate mortgage was steady at 3 3/8%. Primary market rates available to borrowers have converged towards but remain historically wide versus those implied by mortgage-backed security trading in the secondary market. The refinancing index, meanwhile, has trended steadily lower since peaking in late March but rebounded slightly last week. It appears that many borrowers with good credit and documents readily available have already refinanced if they had financial incentive to do so. Separately, the MBA's Forbearance and Call Volume Survey showed a continued but small weekly increase in forbearance. The MBA Mortgage Applications Index ROSE by 9.3% during the week ended June 5 to 784.5, slightly above its 13 week average of 782.6 and 48.1% ABOVE its year-ago level. The Purchase Index ROSE by 5.3% to 311.7, sharply above its 13 week average of 238.6 and 12.0% ABOVE its year-ago level. The Refinance Index ROSE by 11.4% to 3,529. Despite this increase, refinancing activity is sharply below its 13 week average of 3,979 but 80.4% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate increasing by 1 bp to 3.38% and the 15-year fixed rate declining by 2 bps to 2.83%. Key findings of MBA's Forbearance and Call Volume Survey - May 25 to May 31, 2020
- Total loans in forbearance grew by 7 basis points relative to the prior week: from 8.46% to 8.53%.
- By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 11.82% to 11.83%.
- The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 6.39% to 6.40%.
- The share of other loans (e.g., private-label securities and portfolio loans) in forbearance increased the most by investor type and relative to the prior week: from 9.67% to 10.03%.
- Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the eighth consecutive week relative to the prior week: from 0.20% to 0.17%.
- The increase in weekly servicer call center volume was likely driven by end-of-month payment inquiries.
- As a percent of servicing portfolio volume (#), calls increased from 6.4% to 6.7%.
- Average speed to answer increased relative to the prior week from 1.3 minutes to 1.6 minutes.
- Abandonment rates increased from 4.0% to 5.2%.
- Average call length increased from 6.7 minutes to 7.3 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of May 31, 2020:
- Total: 8.53% (previous week: 8.46%)
- IMBs: 8.39% (previous week: 8.21%)
- Depositories: 9.18% (previous week: 9.19%)
Article by Contingent Macro Advisors