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Mortgage Apps: Seasonal Slowdown?

November 11, 2020

Bottom Line: Mortgage activity was modestly higher over the last two weeks, driven by stronger applications for refinancings as the Freddie Mac survey rate held at 2.80% for 30-year fixed-rate mortgages, and realtors reported their clients averaged just below 3% for the first time in this cycle. Purchase activity has slowed just slightly. While the summer's strong upward momentum has waned, overall purchase volumes have remained strong throughout the Fall. Overall, housing activity remains a major driver of the recovery -- but purchase volumes bear watching as we move into winter.

The MBA Mortgage Applications Index FELL by 0.5% during the week ended November 6 to 833.9, modestly above its 13 week average of 795.4 and 46.7% ABOVE its year-ago level.

The Purchase Index FELL by 2.6% to 293.5, modestly below its 13 week average of 310.9 but 15.8% ABOVE its year-ago level.

The Refinance Index ROSE by 0.6% to 3,973. Despite this increase, refinancing activity is sharply above its 13 week average of 3,590 and 67.3% ABOVE its year-ago level.

Contract Mortgage Rates were MIXED with the 30-year fixed rate declining by 3 bps to 2.98% and the 15-year fixed rate was unchanged by 0 bp to 2.55%.

Key findings of MBA's Forbearance and Call Volume Survey - October 26 to November 1, 2020

  • Total loans in forbearance decreased by 16 basis points relative to the prior week: from 5.83% to 5.67%.
    • By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 8.13% to 7.95%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 3.66% to 3.49%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 8.82% to 8.70%.
  • By stage, 22.25% of total loans in forbearance are in the initial forbearance plan stage, while 75.99% are in a forbearance extension. The remaining 1.76% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained unchanged relative to the prior week at 0.10%.
  • Of the cumulative forbearance exits for the period from June 1 through November 1, 2020:
    • 31.6% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 23.6% resulted in a loan deferral/partial claim.
    • 16.9% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 12.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 7.2% resulted in loans paid off through either a refinance or by selling the home.
    • 6.8% 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 increased from 6.7% to 8.1%.
    • Average speed to answer increased from 1.8 minutes to 2.3 minutes.
    • Abandonment rates increased from 5.1% to 6.0%.
    • Average call length remained unchanged relative to the prior week at 7.9 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of November 1, 2020:
    • Total: 5.67% (previous week: 5.83%)
    • IMBs: 6.19% (previous week: 6.27%)
    • Depositories: 5.60% (previous week: 5.86%)

Article by Contingent Macro Advisors