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Mortgage Apps: Holiday Volatility But Trend Concerning

September 16, 2020

Bottom Line: Mortgage activity slipped last week, even after adjusting for the holiday-shortened week. Mortgage rates remain steady below 3 1/8% on a 30-year fixed-rate mortgage for most borrowers and even below 3% for the best credits. Refinancings slipped and accounted for about 63% of applications, still elevated but below the late July/early August highs of 65-66%. Adjustable-rate mortgage volumes remained very low with the 5-year fixed-rate period for the most common ARM carrying rate above that of the 30-year. Overall, housing remains strong, but timely, high-frequency data like application volume will be increasingly important as we monitor slowing momentum coming into the Fall.

The MBA Mortgage Applications Index FELL by 2.5% during the week ended September 11 to 757.2, modestly below its 13 week average of 796.1 but 33.0% ABOVE its year-ago level.

The Purchase Index FELL by 0.5% to 316.2, slightly above its 13 week average of 310.7 and 17.2% ABOVE its year-ago level.

The Refinance Index FELL by 3.7% to 3,289. With this decline, refinancing activity is moderately below its 13 week average of 3,603 but 44.6% ABOVE its year-ago level.

Contract Mortgage Rates were MIXED with the 30-year fixed rate unchanged at 3.07% and the 15-year fixed rate declining by 1 bp to 2.61%.

Key findings of MBA's Forbearance and Call Volume Survey - August 31 to September 6, 2020

  • Total loans in forbearance decreased by 15 basis points relative to the prior week: from 7.16% to 7.01%.
    • By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 9.62% to 9.12%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 4.80% to 4.65%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 10.43% to 10.71%.
  • By stage, 33.69% of total loans in forbearance are in the initial forbearance plan stage, while 65.35% are in a forbearance extension. The remaining 0.96% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.09% to 0.11%.
  • Weekly servicer call center volume:
    • As a percent of servicing portfolio volume (#), calls increased from 7.2% to 8.7%.
    • Average speed to answer increased from 2.4 minutes to 3.3 minutes.
    • Abandonment rates increased from 5.1% to 7.3%.
    • Average call length decreased from 7.8 minutes to 7.7 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of September 6, 2020:
    • Total: 7.01% (previous week: 7.16%)
    • IMBs: 7.33% (previous week: 7.41%)
    • Depositories: 7.21% (previous week: 7.40%)
MBA's latest Forbearance and Call Volume Survey covers the period from August 31 through September 6, 2020, and represents 74% of the first-mortgage servicing market (37.1 million loans).

Article by Contingent Macro Advisors