There was a significant pull-back in the volume of mortgage applications during the week ended January 22. Volume has been down in two of the three full weeks of the new year. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, declined 4.1 percent on a seasonally adjusted basis from one week earlier and was 3.0 percent lower on an unadjusted basis.
The Refinance Index was 5 percent lower than during the week ended January 15, although it outpaced the same week in 2020 by 83 percent. The refinance share of mortgage activity decreased to 70.7 percent from 72.3 percent the previous week.
The seasonally adjusted Purchase Index decreased 4 percent from one week earlier and was down 3 percent on an unadjusted basis. Purchase activity was 16 percent higher than the same week in 2020.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Mortgage rates were mixed last week, with the 30-year fixed rate rising to its highest level since November 2020 at 2.95 percent, and all other rates in the survey posting a decline. In a sign that borrowers are increasingly more sensitive to higher rates, large declines in government purchase applications and refinance applications pulled overall activity lower. The refinance index has now declined for two straight weeks, but is still 83 percent higher than last year," said Joel Kan, MBA's Associate Vice President of Economic and Industry. "Purchase applications also decreased last week, but the impressive trend of year-over-year growth since the second half of 2020 has continued in early 2021. Activity was up 16 percent from a year ago, and the average purchase loan amount hit another record high of $395,200. Since hitting a recent low in April 2020, the average purchase loan amount has steadily risen - in line with the accelerating home-price appreciation occurring in most of the country because of strong demand and extremely low inventory levels."
The FHA share of total applications increased to 9.4 percent from 9.3 percent the previous week and the VA share dropped to 12.4 percent from 13.8 percent. The USDA share of total applications rose to 0.5 percent from 0.4 percent. The average mortgage balance increased from $327,400 to $329,700 and the balance of purchase mortgages rose to $395,200 from $384,000.
The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $548,250 increased to 2.95 percent from 2.92 percent, with points decreasing to 0.32 from 0.37. The effective rate was 3.04 percent.
The average contract interest rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, decreased to 3.17 percent from 3.19 percent, with points increasing to 0.31 from 0.28. The effective rate decreased to 3.26 percent.
Thirty-year FRM with FHA backing had an average rate of 2.88 with 0.34 point. The prior week the rate was 3.01 percent with 0.29 point. The effective rate decreased to 2.98 percent.
The rate for 15-year fixed-rate mortgages decreased 5 basis points to 2.43 percent and points declined to 0.32 from 0.33. The effective rate was 2.51 percent.
The rate for 5/1 adjustable-rate mortgages (ARMs) decreased to 2.60 percent from 2.76 percent, with points increasing to 0.38 from 0.31. The effective rate decreased to 2.74 percent. The adjustable-rate mortgage (ARM) share of activity increased to 2.2 percent of total applications from 2.1 percent a week earlier.
MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.
The Mortgage Bankers Association's (MBA) latest Forbearance and Call Volume Survey puts the total number of loans now in forbearance at 2.7 million. This represents 5.37 percent of loans in servicers' portfolios as of January 17 at 5.38 percent, a slight uptick from 4.37 percent the previous week.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased by 2 basis points to 3.11 percent. Ginnie Mae (FHA and VA) loans in forbearance decreased 6 basis points to 7.61 percent, while the forbearance share for portfolio loans and private-label securities (PLS) increased by 26 basis points to 8.94 percent. The percentage of forborne loans serviced by independent mortgage banks (IMB) was unchanged relative to the prior week at 5.79 percent, and the percentage serviced by depository servicers increased 3 basis points to 5.36 percent. By stage, 18.17 percent of total loans in forbearance are in the initial forbearance plan stage, 79.31 percent are in an extension and 2.52 percent are forbearance re-entries.
"The small increase in the share of loans in forbearance was led by a gain in the portfolio/PLS loan segment. The good news is that the forbearance numbers for GSE loans continues to decline more consistently, as these borrowers typically have stronger credit and more stable employment," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "The rate of exits from forbearance slowed in the prior week, while the rate of new forbearance requests remained steady at a low level."
Fratantoni added, "The latest housing market data show strong momentum entering 2021, with both the pace of home sales and new construction booming. We expect that this strong market could benefit homeowners who need to sell their home, as record-low inventory is causing for-sale homes to go under contract quickly and is pushing up home prices."
MBA's latest Forbearance and Call Volume Survey covers the period from January 11 through January 17, 2021 and represents 74 percent of the first-mortgage servicing market (37.0 million loans).