Mortgage Apps: Rates Drop Sparking Jump in Refis

Bottom Line: The 30-year fixed-rate mortgage held at the recent low, averaging 3.30% again last week. Surprisingly though, applications for refinancing fell, giving back much fo the prior week's gains. As we've noted previously, credit conditions are still tight, with only the most credit-worthy customers able to take advantage of lower rates. They appear to be doing so very quickly when they can, but activity tapers off just as soon once the high credit borrowers with an incentive to refinance have done so. Purchase applications fell slightly, the first decline in ten weeks, but remain in an uptrend. Separately, the MBA's Forbearance and Call Volume Survey showed only a decline in total loans in forbearance for the first time since the shutdowns for the novel coronavirus started. The MBA Mortgage Applications Index FELL by 8.7% during the week ended June 19 to 773.1, slightly above its 13 week average of 766.3 and 49.0% ABOVE its year-ago level. The Purchase Index FELL by 3.0% to 312.7, sharply above its 13 week average of 247.8 and 17.4% ABOVE its year-ago level. The Refinance Index FELL by 11.7% to 3,435. With this decline, refinancing activity is moderately below its 13 week average of 3,807 but 76.2% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate unchanged at 3.30% and the 15-year fixed rate increasing by 1 bp to 2.81%. Key findings of MBA's Forbearance and Call Volume Survey - June 8 to June 14, 2020

• Total loans in forbearance decreased by 7 basis points relative to the prior week: from 8.55% to 8.48%.
• By investor type, the share of Ginnie Mae loans in forbearance remained flat relative to the prior two weeks at 11.83%.
• The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 6.38% to 6.31%.
• The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior week: from 10.18% to 9.99%.
• Forbearance requests as a percent of servicing portfolio volume (#) decreased across all investor types: from 0.19% to 0.15%.
• Weekly servicer call center volume:
• As a percent of servicing portfolio volume (#), calls decreased from 8.0% to 7.7%.
• Average speed to answer decreased relative to the prior week from 1.8 minutes to 1.5 minutes.
• Abandonment rates decreased from 6.0% to 4.6%.
• Average call length was unchanged at 7.1 minutes.
• Loans in forbearance as a share of servicing portfolio volume (#) as of June 14, 2020:
• Total: 8.48% (previous week: 8.55%)
• IMBs: 8.40% (previous week: 8.43%)
• Depositories: 9.15% (previous week: 9.24%)

MBA's latest Forbearance and Call Volume Survey covers the period from June 8 through June 14, 2020, and represents 76% of the first-mortgage servicing market (38.2 million loans).