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Mortgage Apps: Refis Jump, Respond To Lower Rates

July 28, 2021
Bottom Line:  Mortgage applications for refinancing were higher as the average 30-year fixed-rate mortgage hit 3%.  Purchase applications, though, were slightly lower as tight housing supply conditions continue to hinder activity.  Refinancing apps accounted for over 67% of all applications last week, up from 60% of applications as rates hit the highs of the year. Mortgage rates have continued to move lower.  Current coupon yields in the secondary market were down -3 bps last week, closing at 1.72%, and were down -2 bps this week through Tuesday.  Of course, that bears close watching coming out of today's Federal Reserve FOMC meeting.  Beyond refinancing activity, the medium- and longer-term questions will be if mortgage rates can stay below 3% and if that will be enough to propel existing home sales higher again after the modest slowdown in recent months.

The MBA Mortgage Applications Index
ROSE by 5.7% during the week ended July 23 to 737.9,  moderately above its 13 week average of 687.2 but 12.4% BELOW its year-ago level.
                     
The Purchase Index
FELL by 1.6% to 251.7, modestly below its 13 week average of 264.0 and 17.8% BELOW its year-ago level.
 
The Refinance Index
ROSE by 9.3% to 3,570. Despite this increase, refinancing activity is sharply above its 13 week average of 3,148 but 9.7% BELOW its year-ago level.
 
Contract Mortgage Rates
FELL with the 30-year fixed rate declining by 10 bps to 3.01% and the 15-year fixed rate declining by 10 bps to 2.36%.
Key findings of MBA's Forbearance and Call Volume Survey - July 12 to July 18, 2021
  • Total loans in forbearance decreased by 2 basis points relative to the prior week: from 3.50% to 3.48%.
    • By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 4.36% to 4.35%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 1.83% to 1.81%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 7.33% to 7.38%.
  • By stage, 9.8% of total loans in forbearance are in the initial forbearance plan stage, while 83.2% are in a forbearance extension. The remaining 7.0% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.03% to 0.04%.
  • Of the cumulative forbearance exits for the period from June 1, 2020, through July 18, 2021:
    • 28.0% resulted in a loan deferral/partial claim.
    • 23.2% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 15.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 13.4% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 10.8% resulted in a loan modification or trial loan modification.
    • 7.4% resulted in loans paid off through either a refinance or by selling the home.
    • The remaining 1.5% 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 relative to the prior week: from 6.4% to 7.8%.
    • Average speed to answer decreased from 2.0 minutes to 1.1 minutes.
    • Abandonment rates decreased from 4.7% to 4.1%.
    • Average call length decreased from 8.1 minutes to 7.7 minutes.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of July 18, 2021:
    • Total: 3.48% (previous week: 3.50%)
    • IMBs: 3.68% (previous week: 3.68%)
    • Depositories: 3.61% (previous week: 3.62%)
MBA's latest Forbearance and Call Volume Survey covers the period from July 12 through July 18, 2021, and represents 74% of the first-mortgage servicing market (36.9 million loans).