Applications for mortgage financing declined again during the week ended September 3. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, was down 1.9 percent on a seasonally adjusted basis heading into the Labor Day weekend and was 3 percent lower on an unadjusted basis.

The Refinance Index decreased 3 percent from the previous week and was 4 percent below the volume one year ago. Applications for refinancing represented 66.8 percent of the total, unchanged from the week before.

Purchase mortgage volume declined slightly with the seasonally adjusted Purchase Index down 0.2 percent. The unadjusted version was 3 percent lower week-over-week and down 18 percent compared to the same week in 2020.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

 

"Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3 percent for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates."

The FHA share of total applications decreased to 10.9 percent from 11.2 percent while the VA share increased to 10.4 percent from 9.7 percent and USDA share was unchanged from 0.5 percent. The average size of loans declined from $335,900 to $329,200 and the size of purchase mortgages fell to $389,800 from $395,500

The average interest rate for fixed rate mortgages (FRM) changed little from the prior week while adjustable rates continued to be volatile. The average contract interest rate for 30-year FRM with origination balances at or below the conforming limit of $548,250 or less was unchanged at 3.03 percent, with points decreasing to 0.33 from 0.34. The effective rate ticked down to 3.12 percent.

The rate for jumbo 30-year FRM, loans with balances above the conforming limit, increased one basis point to 3.14 percent with points rising to 0.30 from 0.26. The effective rate was 3.23 percent.

The contract rate for 30-year FRM backed by the FHA declined to 3.07 percent from 3.09 percent while points grew to 0.30 from 0.25. The effective rate moved down to 3.15 percent.

Fifteen-year FRM had an average rate of 2.37 percent with 0.26 point. The prior week the rate was 2.39 percent, with 0.30 point. The effective rate decreased to 2.43 percent.

The rate for 5/1 ARMs dropped to 2.56 percent from 2.80 percent, with points increasing to 0.17 from 0.13.  The effective rate fell to 2.62 percent. The ARM share of activity decreased to 2.5 percent of total applications from 3.2 percent, the lowest share since early February.

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 shows a tiny decline from the prior week in the percentage of loans in forbearance. That percentage decreased by 2 basis points to 3.23 percent as of August 29. According to MBA's estimate, 1.6 million homeowners are in forbearance plans with 10.6 percent in the initial forbearance plan stage, 81.2 percent in a forbearance extension, and the remaining 8.2 percent representing reentries to the program.   

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 1.63 percent. The Ginnie Mae (FHA and VA) share dropped by 29 basis points to 3.63 percent and the share of portfolio loans and those in private-label securities (PLS) increased 34 basis points to 7.52 percent. Forborne loans serviced by independent mortgage bank (IMB) servicers decreased 1 basis point to 3.49 percent, and there was a 2 basis point dip in those serviced by depository servicers to 3.33 percent.

"The share of loans in forbearance decreased by two basis points last week, with both new requests and exits remaining at a slow pace as we reached the end of August," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "There was another large shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools and moved onto servicer balance sheets.  As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and work with borrowers to begin paying again before they are resecuritized into Ginnie Mae pools."

MBA's latest Forbearance and Call Volume Survey covers the period from August 23 through August 29 and represents 74 percent of the first-mortgage servicing market (36.9 million loans).