Mortgage application volume lost ground again last week, although the decline was small and refinancing volume pulled out a sliver of a gain. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 0.9 percent on a seasonally adjusted basis during the week ended April 30. On an unadjusted basis, the Index was 1 percent lower than the prior week.  

The Refinance Index increased 0.1 percent from the previous week but lagged the Index on the same week in 2020 by 17 percent. The refinance share of mortgage activity increased to 61.0 percent of total applications from 60.6 percent the previous week.

The seasonally adjusted Purchase Index decreased 3 percent and was down 2 percent on an unadjusted basis. Purchase activity was still up 24 percent compared to the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

"There was a mixed bag of action in the mortgage market last week. Mortgage rates were slightly higher, refinance applications were essentially unchanged, and purchase applications fell for the second straight week," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Both conventional and government purchase applications declined, but average loan sizes increased for each loan type. This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity. The higher prices are also affecting the mix of activity, with stronger growth in purchase loans with larger-than-average balances." 

Added Kan, "An increase in conventional refinances was offset by a decline in government refinances. The 30-year fixed rate was up slightly to 3.18 percent, which is still 22 basis points lower than a year ago, but higher than it was between mid-2020 and February 2021." 

The FHA share of total applications decreased to 10.1 percent from 10.7 percent the prior week and the VA share decreased to 11.9 percent from 12.2 percent. The USDA share was unchanged at 0.4 percent. The average loan balance increased from $330,100 to $337,000 and purchase applications balances rose $8,000 to 408,100.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances at or below the conforming limit of $548,250 increased 1 basis point to 3.18 percent. Points moved to 0.34 from 0.30 and the effective rate was 3.28 percent.

The rate for jumbo 30-year FRM, loans with balances greater than the conforming limit, increased to 3.31 percent from 3.28 percent, with points decreasing to 0.27 from 0.30.The effective rate grew to 3.39 percent.   

Thirty-year FRM backed by the FHA had an average rate of 3.13 percent, up 1 basis point week-over-week. Points dipped to 0.22 from 0.24 and the effective rate climbed to 3.20 percent.

The rate for 15-year FRM decreased to 2.54 percent from 2.55 percent. Although points ticked up to 0.31 from 0.30, the effective rate decreased to 2.62 percent.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) was 2.76 percent, up from 2.59 percent, with points decreasing to 0.23 from 0.47. The effective rate increased to 2.84 percent. The ARM share of activity was 3.9 percent of total applications growing from 3.5 percent the previous 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's latest Forbearance and Call Volume Survey revealed that 4.47 percent of all loans in servicer portfolios were in forbearance as of April 25.  This is a decrease of 2 basis points from the prior week. MBA estimates that 2.23 million homeowners remain in forbearance plans with 12.8 percent of those loans in their initial terms while 82.3 percent are in a forbearance extension. The remaining 4.9 percent are re-entries to the program. 

The share of Fannie Mae and Freddie Mac loans in plans was down 2 points to 2.42 percent and the share of Ginnie Mae (FHA and VA) loans in forbearance decreased 7 basis points to 6.02 percent. The forbearance share for portfolio loans and private-label securities (PLS) increased by 13 basis points to 8.55 percent. The share serviced by independent mortgage bank (IMB) servicers and by depository servicers each decreased 2 basis points to 4.70 percent and 4.62 percent, respectively.

"The share of loans in forbearance decreased for the ninth straight week, dropping by 2 basis points.

The rate of exits has slowed the past two weeks, with this week's exit rate reaching the lowest since February," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "The increase in the forbearance share for portfolio and PLS loans highlights both the ongoing buyouts of delinquent loans from Ginnie Mae pools as well as an increased forbearance share for other loans that are not federally backed."

MBA's latest Forbearance and Call Volume Survey covers the period from April 19 through April 25, 2021 and represents 74 percent of the first-mortgage servicing market (37 million loans).