Mortgage Apps: Steady As Purchases Remain Muted

Bottom Line: The average 30-year fixed-rate mortgage held below 3.5% for the fourth straight week, but applications were steady. Despite the low rates, the 4-week average of purchase applications is at its lowest level in over 5 years. Refinancing applications ebbed in late March and have since been declining as borrowers and banks have focused on other, more pressing loan demands. Still, refi applications remain close to a cycle-high. Overall, the mortgage origination system appears to be functioning reasonably well, but not at the levels that would normally be associated with mortgage rates below 3.5%. Separately, the Mortgage Bankers Association (MBA) released comments on the Federal Housing Finance Agency's (FHFA) announcement that limits mortgage services' obligations to advance principal and interest for 4 months on loans in forbearance. While it welcomed the four-month limit, the MBA noted that the FHFA failed to cap servicers' obligations to advance taxes, homeowners insurance, and mortgage insurance if the borrower doesn't pay those separately. Additionally, there remains no liquidity facility for non-bank mortgage servicers. The MBA Mortgage Applications Index FELL by 0.3% during the week ended April 17 to 768.5, modestly below its 13 week average of 785.5 but 80.6% ABOVE its year-ago level. The Purchase Index ROSE by 2.1% to 186.4, sharply below its 13 week average of 248.1 and 30.8% BELOW its year-ago level. The Refinance Index FELL by 0.8% to 4,207. With this decline, refinancing activity is moderately above its 13 week average of 3,928 and 225.3% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate unchanged at 3.45% and the 15-year fixed rate declining by 1 bp to 3.03%.