Mortgage Apps: Trend Higher Still into Year-End
December 23, 2020
Bottom Line: Mortgage application volumes rose last week, led by applications for refinancing as the 30-year mortgage rate continued to fall. Freddie Mac's survey rate hit a record low, 2.67%, and realtors reported buyers' average rates of 2.86%. On a trend basis, both purchase and refinancing applications are still higher. Expect volatility in these data for the balance of the year as seasonal adjustments become difficult, but all signs point to continued robust housing activity in the early part of 2021. The MBA Mortgage Applications Index ROSE by 0.8% during the week ended December 18 to 863.9, modestly above its 13 week average of 828.5 and 80.5% ABOVE its year-ago level. The Purchase Index FELL by 4.6% to 316.3, slightly above its 13 week average of 314.4 and 26.5% ABOVE its year-ago level. The Refinance Index ROSE by 3.8% to 4,169. Despite this increase, refinancing activity is moderately above its 13 week average of 3,835 and 124.3% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate increasing by 1 bp to 2.86% and the 15-year fixed rate declining by 6 bps to 2.43%. Key findings of MBA's Forbearance and Call Volume Survey - December 7 to December 13, 2020
- Total loans in forbearance increased 1 basis point relative to the prior week: from 5.48% to 5.49%.
- By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 7.68% to 7.79%.
- The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 3.26% to 3.25%.
- The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 8.89% to 8.76%.
- By stage, 18.78% of total loans in forbearance are in the initial forbearance plan stage, while 78.54% are in a forbearance extension. The remaining 2.69% are forbearance re-entries.
- Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.12%.
- Of the cumulative forbearance exits for the period from June 1 through December 13, 2020:
- 29.8% represented borrowers who continued to make their monthly payments during their forbearance period.
- 24.7% resulted in a loan deferral/partial claim.
- 16.2% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 13.2% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 7.3% resulted in loans paid off through either a refinance or by selling the home.
- 6.9% resulted in a loan modification.
- The remaining 1.9% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
- Weekly servicer call center volume:
- As a percent of servicing portfolio volume (#), calls decreased from the previous week from 9.4% to 8.0%.
- Average speed to answer decreased from 3.2 minutes to 1.9 minutes.
- Abandonment rates decreased from 8.0% to 5.3%.
- Average call length decreased from 8.4 minutes to 8.0 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of December 13, 2020:
- Total: 5.49% (previous week: 5.48%)
- IMBs: 5.95% (previous week: 5.98%)
- Depositories: 5.41% (previous week: 5.38%)
Article by Contingent Macro Advisors