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Mortgage Apps: Inching Higher With Low Mortgage Rates

July 22, 2020

Bottom Line: The 30-year fixed-rate mortgage held below 3 1/4% last week, averaging 3.20% and spurring more refinancing applications. Refis are still well off their highs but have been trending lower as Federal Reserve buying in the secondary market has reduced volatility and slowly given mortgage bankers confidence to push primary market rates closer to secondary market rates. Since the highs of November 2018, mortgage rates are down nearly 200bps. Purchase applications were a touch higher last week and are still technically in an uptrend, but the momentum has slowed notably in recent weeks. That loss of momentum bears watching, especially since new lows in mortgage rates should be spurring an acceleration in the trend.

Separately, the MBA's Forbearance and Call Volume Survey showed a fifth straight week of declines in total loans in forbearance, now back below 8% of total loans.

The MBA Mortgage Applications Index ROSE by 4.1% during the week ended July 17 to 848.8, sharply above its 13 week average of 771.5 and 72.9% ABOVE its year-ago level.

The Purchase Index ROSE by 1.8% to 310.9, moderately above its 13 week average of 285.0 and 19.2% ABOVE its year-ago level.

The Refinance Index ROSE by 5.3% to 3,973. Despite this increase, refinancing activity is sharply above its 13 week average of 3,607 and 122.0% ABOVE its year-ago level.

Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 1 bp to 3.20% and the 15-year fixed rate increasing by 1 bp to 2.71%.

Key findings of MBA's Forbearance and Call Volume Survey - June 29 to July 5, 2020

  • Total loans in forbearance decreased by 38 basis points relative to the prior week: from 8.18% to 7.80%.
    • By investor type, the share of Ginnie Mae loans in forbearance decreased: from 10.56% to 10.26%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 6.07% to 5.64%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 10.93% to 10.41%.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained flat relative to the prior week at 0.13%.
  • Weekly servicer call center volume:
    • As a percent of servicing portfolio volume (#), calls increased from 7.8% to 8.3%.
    • Average speed to answer increased relative to the prior week from 2.5 minutes to 2.6 minutes.
    • Abandonment rates decreased slightly from 7.4% to 7.2%.
    • Average call length increased from 7.4 minutes to 7.6 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of July 12, 2020:
    • Total: 8.18% (previous week: 8.39%)
    • IMBs: 7.83% (previous week: 8.10%)
    • Depositories: 8.23% (previous week: 8.80%)
    MBA's latest Forbearance and Call Volume Survey covers the period from July 6 through July 12, 2020, and represents 75% of the first-mortgage servicing market (37.3 million loans).

    Article by Contingent Macro Advisors