Mortgage Apps: Sixth Week of Higher Purchase Apps

Bottom Line: Mortgage purchases applications rose again last week as the housing market continues to lead the recovery from the mid-April lows. The Mortgage Bankers Associations' purchase index is up over 50% since the first full week of April. The average 30-year fixed-rate mortgage held below 3.5% for the ninth straight week amid Federal Reserve support for the secondary mortgage market via purchases of agency mortgage-backed securities (MBS). Additionally, primary mortgage rates remain high relative to the secondary market for MBS, so there is scope for a slow decline in the primary rate as volatility declines and bank staffing adjusts to the pipeline of loan demand. The refinancing index, meanwhile, has trended steadily lower since peaking in late March and was down slightly last week. We'll keep an eye on this in the coming weeks, though, as the 5-year Adjustable-rate Mortgage fell to its lowest rate in this cycle last week, 3.08%. Separately, the MBA's Forbearance and Call Volume Survey showed the smallest weekly increase in forbearance since March. The MBA Mortgage Applications Index ROSE by 2.7% during the week ended May 22 to 746.5, moderately below its 13 week average of 815.2 but 81.4% ABOVE its year-ago level. The Purchase Index ROSE by 8.6% to 281.2, sharply above its 13 week average of 233.8 and 8.4% ABOVE its year-ago level. The Refinance Index FELL by 0.2% to 3,466. With this decline, refinancing activity is sharply below its 13 week average of 4,234 but 176.1% ABOVE its year-ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate increasing by 1 bp to 3.42% and the 15-year fixed rate declining by 1 bp to 2.87%. ______________ Key findings of MBA's Forbearance and Call Volume Survey - May 11 to May 17, 2020

• Total loans in forbearance grew relative to the prior week: from 8.16% to 8.36%. This 20-basis-point weekly increase was the smallest increase reported since the week of March 9.
• By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 11.26% to 11.60%.
• The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 6.25% to 6.36%.
• The share of other loans (e.g., private-label securities and portfolio loans) in forbearance increased relative to the prior week: from 9.26% to 9.54%.
• Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the sixth consecutive week relative to the prior week: from 0.32% to 0.28%.
• Weekly servicer call center volume:
• As a percent of servicing portfolio volume (#), calls increased from 7.8% to 8.6%.
• Average speed to answer decreased relative to the prior week from 2.0 minutes to 1.6 minutes.
• Abandonment rates decreased from 5.3% to 4.6%.
• Average call length increased from 6.7 minutes to 7.0 minutes.
• Loans in forbearance as a share of servicing portfolio volume (#) as of May 17, 2020:
• Total: 8.36% (previous week: 8.16%)
• IMBs: 8.11% (previous week: 7.85%)
• Depositories: 9.13% (previous week: 8.99%)

MBA's latest Forbearance and Call Volume Survey covers the period from May 11 through May 17, 2020, and represents almost 77% of the first-mortgage servicing market (38.3 million loans).