Mortgage Apps: Purchase App Uptrend Continues
June 3, 2020
Bottom Line: Seven weeks of gains in the purchase applications offered more signs that the housing market will be a source of strength in the recovery from the shutdowns for the novel coronavirus. Mortgage purchase applications rose after adjusted for the holiday-shortened week ended May 29th. The average 30-year fixed-rate mortgage fell to 3.37%, steadily grinding lower as primary market rates available to borrowers have converged towards those implied mortgage-backed security trading in the secondary market. The refinancing index, meanwhile, has trended steadily lower since peaking in late March and was down slightly last week. It appears that many borrowers with good credit and documents readily available have already refinanced if there was financial incentive at these rates. Separately, the MBA's Forbearance and Call Volume Survey showed a small weekly increase in forbearance since March. The MBA Mortgage Applications Index FELL by 3.9% during the week ended May 29 to 717.7, sharply below its 13 week average of 812.4 but 71.8% ABOVE its year-ago level. The Purchase Index ROSE by 5.3% to 296.0, sharply above its 13 week average of 236.2 and 16.9% ABOVE its year-ago level. The Refinance Index FELL by 8.6% to 3,167. With this decline, refinancing activity is sharply below its 13 week average of 4,201 but 137.1% ABOVE its year-ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 5 bps to 3.37% and the 15-year fixed rate declining by 2 bps to 2.85%. Key findings of MBA's Forbearance and Call Volume Survey - May 18 to May 24, 2020
- Total loans in forbearance grew relative to the prior week from 8.36% to 8.46%. This 10-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 11.60% to 11.82%.
- The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 6.36% to 6.39%.
- The share of other loans (e.g., private-label securities and portfolio loans) in forbearance increased relative to the prior week: from 9.54% to 9.67%.
- 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 0.28% to 0.20%.
- Weekly servicer call center volume:
- As a percent of servicing portfolio volume (#), calls decreased from 8.6% to 6.6% - the lowest since this survey series began in the week of March 2.
- Average speed to answer and abandonment rates also reached their lowest levels for this series. Average speed to answer decreased relative to the prior week from 1.6 minutes to 1.3 minutes. Abandonment rates decreased from 4.6% to 4.0%.
- Average call length decreased from 7.0 minutes to 6.7 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of May 24, 2020:
- Total: 8.46% (previous week: 8.36%)
- IMBs: 8.21% (previous week: 8.11%)
- Depositories: 9.19% (previous week: 9.13%)
Article by Contingent Macro Advisors