Mortgage application volume rose for the first time since mid-April last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, increased 2.1 percent on a seasonally adjusted basis during the week ended May 7 and was 2.0 percent higher on an unadjusted basis.

The Refinance Index gained 3 percent from the previous week but was down 12 percent from its level during the same week one year ago. The refinance share of mortgage activity increased to 61.3 percent of total applications from 61.0 percent the previous week.

Both the seasonally adjusted and the unadjusted Purchase Indices grew by 1 percent from the prior week. The unadjusted Purchase Index was 13 percent higher than the same week in 2020.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting said, "Mortgage rates fell last week to the lowest levels since February, tracking the dip in Treasury yields. The decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4 percent increase in conventional refinances. Additionally, refinance loan balances increased for the fourth straight week, an indication that higher-balance borrowers acted to take quick advantage of lower rates.

"The first week of May was also strong for the purchase market. Applications were up 13 percent from a year ago, which was around the time the housing market awakened from the pandemic-induced stall in activity," Kan said. "Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials."  

The FHA share of total applications decreased to 9.9 percent from 10.1 percent week-over-week and the VA share decreased to 11.7 percent from 11.9 percent. The USDA loans accounted for an 0.5 percent share, up from 0.4 percent the previous week. The average loan balance was $337,700 compared to $337,000 the prior week and the balance of a purchase loan increased to $409,800 from $408,100.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming loan limit of $548,250 decreased to 3.11 percent from 3.18 percent. Points dipped to 0.32 from  0.34 and the effective rate decreased to 3.21 percent.

The rate for jumbo 30-year FRM, loans with balances that exceed the conforming limit, decreased to 3.27 percent from 3.31 percent, with points increasing to 0.34 from 0.27. The effective rate was 3.37 percent.   

Thirty-year FRM with FHA backing had an average interest rate of 3.07 percent with 0.34 point. The previous week the rate was 3.13 percent with 0.34 point. The effective rate declined to 3.17 percent.

The average contract interest rate for 15-year FRM dropped 6 basis points to 2.49 percent and points declined to 0.29 from 0.31. The effective rate was 2.56 percent.  

The rate for 5/1 adjustable rate mortgages (ARMs) fell to 2.57 percent from 2.76 percent, with points decreasing to 0.22 from 0.23. The effective rate dropped to 2.65 percent. The adjustable-rate mortgage (ARM) share of activity decreased to 3.8 percent of total applications from 3.09 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 an 11 basis point reduction in the total number of loans now in forbearance to 4.36 percent as of May 2, 2021, leaving an estimated 2.2 million homeowners in active plans.  By stage, 12.5 percent of total loans in forbearance are in their initial plans while 82.2 percent are in a forbearance extension. The remaining 5.3 percent are reentries to the program.   

The share of Fannie Mae and Freddie Mac loans in forbearance decreased from 2.42 percent to 2.32 percent and there was a decline of 20 basis points in the share of Ginnie Mae (FHA and VA) loans to 5.82 percent . The forborne share of portfolio loans and private-label securities (PLS) was unchanged at 8.55 percent. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 12 basis points to 4.58 percent, and the percentage of loans in forbearance for depository servicers declined 15 basis points to 4.47 percent.

"The pace in the declining share of loans in forbearance quickened in the last week of April. This 10th week of decreases reflected a faster rate of exits and a steady, low level of new requests," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Homeowners who have exited forbearance and been able to take up their original payment again are performing at almost the same rate as the overall mortgage servicing portfolio." 

Added Fratantoni, "More than 47 percent of borrowers in forbearance extensions are past the 12 month mark as of the end of April. Many homeowners continue to struggle and are falling farther behind on their obligations each month. We expect that a robust economic and job market recovery over the next several months will help these families regain their jobs and their incomes."

MBA's latest Forbearance and Call Volume Survey covers the period from April 26 through May 2, 2021 and represents 74 percent of the 36.9 million loans in the first-mortgage servicing market.