Mortgage Apps: Holiday Masked Strong Trend
December 9, 2020
Bottom Line: Mortgage application volumes were slightly lower after seasonal adjustments for the Thanksgiving holiday. But the trend remained strong, and there were no indications of any change in the trend. With realtors reporting an average 30-year fixed-rate mortgage of 2.90% and the Freddie Mac Survey Rate for 30-year mortgages averaging 2.72%, activity remains robust, even during this seasonally slower part of the year. Overall, housing activity remains a major driver of the recovery, and mortgage application data suggest that should continue at least through the end of the quarter and likely even longer. The only hint of concern that we'll keep an eye on -- forbearances --- both those were steady after falling sharply throughout the Fall. The MBA Mortgage Applications Index FELL by 1.2% during the week ended December 4 to 848.3, modestly above its 13 week average of 816.5 and 59.4% ABOVE its year-ago level. The Purchase Index FELL by 5.0% to 325.7, modestly above its 13 week average of 314.1 and 21.4% ABOVE its year-ago level. The Refinance Index ROSE by 1.8% to 3,959. Despite this increase, refinancing activity is modestly above its 13 week average of 3,733 and 89.1% ABOVE its year-ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 2 bps to 2.90% and the 15-year fixed rate declining by 2 bps to 2.51%. Key findings of MBA's Forbearance and Call Volume Survey - November 23 to November 29, 2020
- Total loans in forbearance remained unchanged relative to the prior week at 5.54%.
- By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 7.83% to 7.89%.
- The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior week: from 3.36% to 3.34%.
- The share of other loans (e.g., portfolio and PLS loans) in forbearance increased relative to the prior week: from 8.63% to 8.70%.
- By stage, 19.81% of total loans in forbearance are in the initial forbearance plan stage, while 77.90% are in a forbearance extension. The remaining 2.29% are forbearance re-entries.
- Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.11% to 0.08%.
- Of the cumulative forbearance exits for the period from June 1 through November 29, 2020:
- 30.2% represented borrowers who continued to make their monthly payments during their forbearance period.
- 24.4% resulted in a loan deferral/partial claim.
- 16.6% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
- 12.8% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
- 7.3% resulted in loans paid off through either a refinance or by selling the home.
- 6.8% resulted in a loan modification.
- The remaining 1.9% 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 from the previous week from 7.7% to 5.3% - a survey low.
- Average speed to answer decreased from 2.1 minutes to 1.7 minutes.
- Abandonment rates decreased from 5.5% to 4.0%.
- Average call length remained unchanged at 8.0 minutes.
- Loans in forbearance as a share of servicing portfolio volume (#) as of November 29, 2020:
- Total: 5.54% (previous week: 5.54%)
- IMBs: 6.02% (previous week: 6.03%)
- Depositories: 5.48% (previous week: 5.47%)
Article by Contingent Macro Advisors