Mortgage Application volume continued to trend down during the week ended March 26. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, declined 2.2 percent on a seasonally adjusted basis from the previous week and was down 2 percent on an unadjusted basis. It was the tenth time the index has declined in the 13 weeks since 2021 began.

The Refinance Index decreased 3 percent from the previous week and was 32 percent lower than the same week one year ago. Refinancing, however, still accounts for the lion's share of applications, 60.6 percent during the week, down only slightly from the week ended March 19.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. Unadjusted, the Index was down 1 percent and was 39 percent higher than the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

"After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33 percent, which is still almost half a percentage point higher than the start of this year. Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago, as well as up 6 percent from the same week in March 2019," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Many prospective homebuyers this spring are feeling the effects of higher rates and rapidly accelerating home prices. Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10 percent growth rates seen in 2005. The housing market is in desperate need of more inventory to cool price growth and preserve affordability."  

The FHA share of total applications decreased to 11.3 percent from 11.7 percent while the VA share grew to 10.3 percent from 9.8 percent. The USDA share was unchanged at  0.4 percent. The average loan balance decreased for all loans from $333,000 the previous week to $324,800. Purchase loan balances were also smaller than a week earlier, $401,400 compared to $409,300.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $548,250, decreased to 3.33 percent from 3.36 percent, with points dropping to 0.39 from  0.42. The effective dipped to 3.44 percent. . 

The average contract interest rate for jumbo 30-year FRM., loans with balances exceeding the conforming limit, decreased to 3.34 percent from 3.40 percent, with points decreasing to 0.31 from 0.43. The effective rate was 3.43 percent.

FHA-backed 30-year FRM had an average rate of 3.29 percent, down from 3.35 percent the previous week. Points decreased to 0.34 from 0.41 and the effective rate was reduced to 3.39 percent.  

The rate for 15-year fixed-rate mortgages dipped 1 basis point to 2.71 percent and points fell to 0.33 from 0.40.  The effective rate was 2.80 percent.

The average contract interest rate for 5/1 adjustable rate mortgages increased to 2.85 percent from 2.79 percent, with points decreasing to 0.40 from 0.44. The effective rate increased to 3.0 percent. The ARM share of all applications grew to 3.4 percent from 3.2 percent the prior week.  

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.

MBA said its latest Forbearance and Call Volume Survey showed a 9 basis point reduction in the total number of loans now in forbearance. As of March 21, there were approximately 2.5 million homeowners in plans, 5.05 percent of servicers' total portfolios. By stage, 13.8 percent of total loans in forbearance are in the initial forbearance plan stage, while 83.4 percent are in a forbearance extension. The remaining 2.8 percent are forbearance re-entries.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased to 2.77 percent - a 6-basis-point improvement. Ginnie Mae (VA/FHA) loans in forbearance fell 20 basis points to 6.83 percent, while the forbearance share for portfolio loans and private-label securities (PLS) declined 1 basis point to 8.90 percent. The percentage of loans in forbearance by independent mortgage bank (IMB) servicers decreased 14 basis points to 5.23 percent, and those serviced by depository servicers were down 5 basis points to 5.10 percent.

"The share of loans in forbearance decreased for the fourth straight week, dropping below 5 percent for the first time in a year. New forbearance requests remained at their lowest level since last March, and the pace of exits increased," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "More than 17 percent of borrowers in forbearance extensions have now exceeded the 12-month mark."

Fratantoni added, "Many homeowners need this support, even as there are increasing signs that the pace of economic activity is picking up as the vaccine rollout continues. Those who have an ongoing hardship due to the pandemic and want to extend their forbearance beyond the 12-month point need to contact their servicer. Servicers cannot automatically extend forbearance terms without the borrower's consent."

MBA's latest Forbearance and Call Volume Survey covers the period from March 15 through March 21, 2021 and represents 74 percent of the first-mortgage servicing market (37.1 million loans).