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Mortgage Apps: Modest Uptick, Trend Still Toppy

September 9, 2020

Bottom Line: Mortgage activity remains healthy for both purchase and refinancing, but the pace of acceleration in the industry has topped out for now. Applications edged higher in the week before the long holiday weekend. Refinancings accounted for about 63% of applications, still elevated but below the late July/early August highs of 65-66%. Adjustable-rate mortgage volumes continued to fall, now just 2.2% of overall volumes as the 30-year fixed-rate stood at 3.07%, 8bps above the 5/1 ARM (5-year fixed, then floating for 25). And 15-year fixed-rates were even lower at only 2.62% on average last week. Overall, housing remains strong, but timely, high-frequency data like application volume will be increasingly important into the Fall.

The MBA Mortgage Applications Index ROSE by 2.9% during the week ended September 4 to 776.7, modestly below its 13 week average of 803.0 but 36.3% ABOVE its year-ago level.

The Purchase Index ROSE by 2.6% to 317.7, modestly above its 13 week average of 311.2 and 25.3% ABOVE its year-ago level.

The Refinance Index ROSE by 3.0% to 3,415. Despite this increase, refinancing activity is modestly below its 13 week average of 3,649 but 43.6% ABOVE its year-ago level.

Contract Mortgage Rates FELL with the 30-year fixed rate declining by 1 bp to 3.07% and the 15-year fixed rate declining by 5 bps to 2.62%.

Key findings of MBA's Forbearance and Call Volume Survey - August 24 to August 30, 2020

  • Total loans in forbearance decreased by 4 basis points relative to the prior week: from 7.20% to 7.16%.
    • By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 9.58% to 9.62%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 4.88% to 4.80%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 10.44% to 10.43%.
  • By stage, 35.76% of total loans in forbearance are in the initial forbearance plan stage, while 63.29% are in a forbearance extension. The remaining 0.94% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.10% to 0.09%, the lowest level reported for this series since March.
  • Weekly servicer call center volume:
    • As a percent of servicing portfolio volume (#), calls remained unchanged at 7.2%.
    • Average speed to answer increased from 2.2 minutes to 2.4 minutes.
    • Abandonment rates increased from 4.9% to 5.1%.
    • Average call length increased from 7.7 minutes to 7.8 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of August 30, 2020:
    • Total: 7.16% (previous week: 7.20%)
    • IMBs: 7.41% (previous week: 7.41%)
    • Depositories: 7.40% (previous week: 7.49%)
MBA's latest Forbearance and Call Volume Survey covers the period from August 24 through August 30, 2020, and represents 75% of the first-mortgage servicing market (37.3 million loans).

Article by Contingent Macro Advisors