The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, fell again during the week ended May 28. It was the 15th time the index has retreated in the 21 weeks since the year began. The Index decreased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week.

The Refinance Index dropped 5 percent from the previous week and was 6 percent higher than the same week in 2020 which was a holiday week. The refinance share of mortgage activity decreased to 61.3 percent of total applications from 61.4 percent the previous week.  

The seasonally adjusted Purchase Index declined by 3 percent. It was down 5 percent before adjustment and 2 percent lower than the corresponding week last year.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

"Mortgage applications decreased for the second week in a row, with the overall index reaching its lowest level since February 2020," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Tight housing inventory, obstacles to a faster rate of new construction, and rapidly rising home prices continue to hold back purchase activity. The government purchase index declined to its lowest level in over a year and has now decreased year-over-year for five straight weeks. Purchase applications were down almost 2 percent from a year ago, but that was compared to the week of Memorial Day 2020."

Added Kan, "Refinance activity dropped for the second straight week, even as the 30-year fixed rate decreased slightly to 3.17 percent. Even though rates have been below 3.20 percent over the past month, they are still around 20-30 basis points higher than the record lows in late 2020."

The FHA share of total applications increased to 9.6 percent from 9.1 percent and the VA share dipped to 10.9 percent from 11.2 percent. USDA applications held to the same 0.4 percent share as the prior week. The balance of an average mortgage declined from $338,500 to $337,200 and purchase mortgages from $408,700 to $408,300.  

The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances of $548,250 or less decreased to 3.17 percent from 3.18 percent, with points increasing to 0.39 from 0.35. The effective rate increased to 3.29 percent.   

The rate for jumbo 30-year FRMs, loans with balances exceeding the conforming limit, added 4 basis points, rising to 3.34 percent. Points increased to 0.38 from 0.30. The effective rate was 3.45 percent.

Thirty-year FRM backed by the FHA had an average rate of 3.16 percent with 0.31 point. The prior week it was 3.20 percent with 0.25 point. The effective rate ticked down to 3.25 percent.  

The average contract interest rate for 15-year FRM increased to 2.56 percent from 2.53 percent, with points increasing to 0.31 from 0.27. The effective rate moved up to 2.63 percent.  

The 5/1 adjustable rate mortgage had an average rate of 2.54 percent, down 27 basis points from the previous week. Points were unchanged at 0.29. This dropped the effective rate to 2.65 percent. The ARM share of activity decreased from 4.0 percent to 3.7 percent.  

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 for the week ended May 23 put the total number of loans now in forbearance at 4.19 percent of the 37 million active mortgage universe. This is down 1 basis point from the prior week and represents approximately 2.1 million forborne loans. By stage, 11.6 percent of those loans are in the initial forbearance plan stage, while 82.8 percent are in an extension. The remaining 5.6 percent are forbearance re-entries.

The share of Fannie Mae and Freddie Mac loans in active plans dipped 2 basis points to 2.19 percent. Ginnie Mae (FHA and VA) loans decreased 4 basis points to 5.55 percent, while the forbearance share for portfolio loans and private-label securities (PLS) increased 11 basis points to 8.37 percent. The percentage of loans in forbearance in independent mortgage bank (IMB) servicers' portfolios declined 2 basis points to 4.36 percent, and the percentage of loans in forbearance for depository servicers was down 1 basis point to 4.34 percent.

"The share of loans in forbearance slightly declined, dropping by only 1 basis point, due to a slower pace of forbearance exits. This was the 13th straight week of declines," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Forbearance re-entries increased to almost 5.6 percent, as more homeowners who had canceled forbearance needed assistance again. There was also an increase in the share of PLS and portfolio loans in forbearance, while the share for Fannie Mae, Freddie Mac, and Ginnie Mae loans decreased."

Added Fratantoni, "Housing market data continue to paint a picture of strong demand and constrained supply. The resulting rapid growth in home equity will benefit homeowners, whether they choose to retain or sell their properties."