Mortgage Apps: Rates Drop Sparking Jump in Refis
June 17, 2020
Bottom Line: The 30-year fixed-rate mortgage hit a new low, averaging 3.30% last week and sparking an increase in refinancing activity. Refis jumped 10% after trending mostly sideways since a brief spike as rates fell in late March. Nine 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. While housing starts data reported today show continued uncertainty for homebuilders amid varying reopening restrictions across the country, the demand from potential buyers appears to still be strong. Separately, the MBA's Forbearance and Call Volume Survey showed only a slight increase in total loans in forbearance. The MBA Mortgage Applications Index ROSE by 8.0% during the week ended June 12 to 846.9, sharply above its 13 week average of 765.2 and 65.5% ABOVE its year-ago level. The Purchase Index ROSE by 3.5% to 322.5, sharply above its 13 week average of 242.0 and 20.1% ABOVE its year-ago level. The Refinance Index ROSE by 10.3% to 3,892. Despite this increase, refinancing activity is slightly above its 13 week average of 3,836 and 106.0% ABOVE its year-ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 8 bps to 3.30% and the 15-year fixed rate declining by 3 bps to 2.80%. Key findings of MBA's Forbearance and Call Volume Survey - June 1 to June 7, 2020
- Total loans in forbearance increased by 2 basis points relative to the prior week: from 8.53% to 8.55%.
- By investor type, the share of Ginnie Mae loans in forbearance remained flat relative to the prior week at 11.83%.
- The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 6.40% to 6.38%.
- The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 10.03% to 10.18%.
- Forbearance requests as a percent of servicing portfolio volume (#) increased across all investor types for the first time since the week of March 30-April 5: from 0.17% to 0.19%.
- The increase in weekly servicer call center volume was likely driven by beginning-of-month payment inquiries.
- As a percent of servicing portfolio volume (#), calls increased from 6.7% to 8.0%.
- Average speed to answer increased relative to the prior week from 1.6 minutes to 1.8 minutes.
- Abandonment rates increased from 5.2% to 6.0%.
- Average call length decreased from 7.3 minutes to 7.1 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of June 7, 2020:
- Total: 8.53% (previous week: 8.55%)
- IMBs: 8.43% (previous week: 8.39%)
- Depositories: 9.24% (previous week: 9.18%)
Article by Contingent Macro Advisors