Despite newly lower interest rates, mortgage applications were lower during the week ended July 30. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, was 1.7 percent lower on a seasonally adjusted basis than the previous week and was down 2 percent on an unadjusted basis.  

The Refinance Index was also lower, declining by 2 percent from the previous week and was 3 percent lower than the same week one year ago. Refinancing continued to dominate activity with a 67.6 percent share of total applications, up from 67.5 percent during the week ended July 23.

The Purchase Index decreased 2 percent on both an adjusted and unadjusted basis from the prior week. The unadjusted index was 18 percent lower than the same week in 2020.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

"Interest rates drifted lower globally last week, as markets assessed the latest concerns regarding the delta variant. 30-year mortgage rates dropped below 3 percent in our survey for the first time since this February, presenting an opportunity for many homeowners who have not yet refinanced to lower their rate and their payments. Refinance application volume slightly decreased, following an 11 percent jump last week," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Purchase application volume decreased again, reflecting the ongoing lack of inventory that continues to drive rapid home-price appreciation across the country."

The FHA and USDA share of applications were unchanged from the prior week at 9.0 percent and 0.5 percent, respectively and the VA share ticked up to 9.9 percent from 9.7 percent. The size of loans declined significantly, from a $357,700 average for all loans the prior week to $345,300 while purchase loan balances fell to $394,100 from $404,200.

Rates were mixed. 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 2.97 percent from 3.01 percent, with points dipping to 0.33 from 0.34. The effective rate declined to 3.07 percent. 

The rate for jumbo 30-year FRM, loans with balances that exceed the conforming limit, was 3.12 percent, up 1 basis point week-over-week. Points increased to 0.30 from 0.27 and the effective rate rose to 3.20 percent. 

Thirty-year FRM with FHA backing had an average rate of 3.08 percent with 0.29 point. The previous week the rate was 3.03 percent with 0.35 point. The effective rate increased to 3.16 percent.

The contract rate for 15-year fixed-rate mortgages dipped by 3 basis points to 2.33 percent while points decreased to 0.23 from 0.30. The effective rate was 2.39 percent.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) jumped to 2.93 percent from 2.81 percent and points dropped to 0.20 from 0.23. The effective rate increased to 3.0 percent. The adjustable-rate mortgage (ARM) share of activity decreased to 3.4 percent of total applications from 3.6 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 latest Forbearance and Call Volume Survey puts the total number of loans in forbearance at 1.74 million. This is 3.47 percent of the universe of active mortgage loans, down 1 basis point from the prior week. Only 10.0 percent of forborne loans are in their initial three month term while 82.8 percent are in an extension. The remaining 7.2 percent are re-entries to the program. 

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 1.79 percent. Ginnie Mae (FHA and VA) loans dropped by 5 basis points to 4.30 percent, while the forbearance share for portfolio loans and private-label securities (PLS) increased 6 basis points to 7.44 percent. The percentage of loans in forbearance that are serviced by independent mortgage bank (IMB) servicers decreased 1 basis point to 3.67 percent and the percentage in depository servicers' portfolios was down 2 basis points to 3.59 percent.

"Forbearance exits remained low, and there was another increase in new forbearance requests, particularly for Ginnie Mae and portfolio and PLS loans. The net result was another slight decline in the share of loans in forbearance," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "While the overall number of loans in forbearance has changed little in recent weeks, forbearance reentries have increased, reaching 7.2% this week. Recent economic data continue to show improvement, but it's clear many homeowners in forbearance still need the relief that is being provided." 

MBA's latest Forbearance and Call Volume Survey covers the period from July 19 through July 25, 2021 and represents 74 percent of the first-mortgage servicing market (36.9 million loans).