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Mortgage Apps: Sluggish Volumes Continued

August 25, 2021

Bottom Line: Mortgage application volume remained sluggish last week with only a slight move higher as rates dipped modestly. Realtors reported slightly lower average 30-year fixed mortgage rates at 3.03%, down 3bps, but secondary markets were largely unchanged. Current coupon yields in the secondary market were little changed, closing at 1.78%, and were little changed this week through Tuesday. Trends are mixed to lower for both purchase and refi applications. Largely confirmed by the latest existing and new home sales data, housing market activity appears to be plateauing at a historically moderate to strong pace as buyers struggle with affordability in an environment where rates would need to decline substantially again to offset the higher prices in most markets.
The MBA Mortgage Applications Index ROSE by 1.6% during the week ended August 20 to 737.1, modestly above its 13 week average of 696.9 but 4.3% BELOW its year-ago level.

The Purchase Index ROSE by 3.0% to 257.5, slightly below its 13 week average of 257.9 and 17.0% BELOW its year-ago level.

The Refinance Index ROSE by 0.9% to 3,521. Despite this increase, refinancing activity is moderately above its 13 week average of 3,246 and 2.9% ABOVE its year-ago level.

Contract Mortgage Rates FELL with the 30-year fixed rate declining by 3 bps to 3.03% and the 15-year fixed rate declining by 3 bps to 2.38%.

Key findings of MBA's Forbearance and Call Volume Survey - August 9 to August 15, 2021

Total loans in forbearance decreased by 1 basis point relative to the prior week: from 3.26% to 3.25%.
- By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior week: from 3.95% to 3.92%.
- The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 1.69% to 1.66%.
- The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 7.05% to 7.15%.
By stage, 10.0% of total loans in forbearance are in the initial forbearance plan stage, while 82.3% are in a forbearance extension. The remaining 7.7% are forbearance re-entries.
Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.06% to 0.05%.
Of the cumulative forbearance exits for the period from June 1, 2020, through August 15, 2021, at the time of forbearance exit:
- 28.3% resulted in a loan deferral/partial claim.
- 22.6% represented borrowers who continued to make their monthly payments during their forbearance period.
- 16.1% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 13.1% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 11.1% 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 1.4% 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 decreased relative to the prior week: from 7.5% to 7.3%.
- Average speed to answer remained the same at 1.5 minutes.
- Abandonment rates decreased from 5.0% to 4.6%.
- Average call length increased from 7.5 minutes to 7.9 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of August 15, 2021:
- Total: 3.25% (previous week: 3.26%)
- IMBs: 3.48% (previous week: 3.46%)
- Depositories: 3.35% (previous week: 3.36%)

MBA's latest Forbearance and Call Volume Survey covers the period from August 9 through August 15, 2021 and represents 74% of the first-mortgage servicing market (36.9 million loans).

Article by Contingent Macro Advisors