Lower rates increase the volume of government loans

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Both refinancing and purchase applications increased slightly last weekThe Mortgage Bankers Association (MBA) said its Market Composite Index, which measures the volume of applications for mortgages, was up 1.6 percent on a seasonally adjusted basis and 1.0 percent unadjusted from a week earlier.

V Refinancing index increased by 1 percent compared to the previous week and was 3 percent higher than the same week a year ago. The share of refinancing of mortgage activities did not change compared to the previous week and amounted to 67.3 percent of the total number of applications.

The seasonally adjusted shopping index was up 3 percent, up 1 percent before adjustment, from a week earlier. The unadjusted index was 16 percent lower than the same week a year ago.

Refi index vs 30-year fixed

Purchase index versus fixed value over 30 years

“Treasury yields fell last week as investors continued to watch with dismay to see if the surge in COVID-19 cases in several states will weaken economic activity. As a result, mortgage rates fell slightly, with the 30-year fixed rate falling for the first time. “The rate cut has led to an increase in refinancing applications, with government loan applications jumping 10 percent to their highest level since May 2021,” said Joel Kahn, MBA’s deputy vice president for economic and industry forecasting. “Applications for the purchase of both conventional and government loans have also increased. The buying index was at its highest level since early July, despite still lagging behind the pace of 2020. which is potentially a sign that more buyers are looking for lower-priced homes for the first time. they are helped by the recent increase in the number of homes for sale in both newly built and existing homes. ”

FHA’s share of total filings increased from 9.4 percent to 11.0 percent, while VA’s share fell 0.3 points to 10.0 percent. The share of the USDA did not change at 0.4 percent. Kahn said the size of mortgage loans fell again and averaged $ 333,300 compared to the previous week. The size of the mortgage for the purchase decreased from $ 339,200 to $ 392,400.

V average contractual interest rate for 30-year fixed rate mortgages (FRM) with original account balances at or below the corresponding limit of $ 548,250, it fell to 3.03 percent from 3.06 percent. Points moved from 0.34 to 0.29, and the effective rate fell to 3.11 percent.

Jumbo 30-year FRMs, loans with balances in excess of the corresponding limit, had an average rate of 3.13, which is 6 basis points lower than the previous week. The scores remained unchanged at 0.26, while the effective rate dropped to 3.21 percent.

The rate for the 30-year FHA-backed FRM fell to 3.10 percent from 3.15 percent. with a decrease in points to 0.29 from 0.31. The effective rate was 3.18 percent.

The fifteen-year-old FRM had an average rate of 2.38% with 0.29 points. In the previous week, the rate was 2.41 percent at 0.28 points. The effective rate fell to 2.45 percent.

Adjustable rate mortgage (ARM) 5/1 rates averaged 2.68 percent, down 22 basis points. Points climbed to 0.24 from 0.23 and the effective rate fell to 2.77 percent. ARM’s share of activity dropped to 3.1 percent of total filings from 3.2 in the previous week.

The MBA’s Weekly Mortgage Application Survey has been running since 1990 and covers more than 75 percent of all home applications in the United States. Among the respondents are mortgage bankers, commercial banks and savings institutions. The base period and value for all indices is March 16, 1990 = 100, and the interest rate information is based on loans with an 80% loan-to-value ratio and points that include loan origination fees.

The latest MBA study on tolerance and call volume found that the total deferred loans decreased by 1 basis point from 3.26 percent of the portfolio of service companies in the previous week to 3.25 percent as of August 15, 2021. The MBA estimates 1.6 million homeowners are on abstinence plans. Ten percent of these loans were issued at their original terms, and 82.3 percent received one or more renewals. The remaining 7.7% falls on re-entry by abstinence.

The proportion of loans to Fannie Mae and Freddie Mac and loans to Ginnie Mae (FHA and VA) in deferral fell 3 basis points to 1.66 percent and 3.92 percent of their respective portfolios. The decline was offset by a 10 basis point increase in the share of portfolio loans and private label securities (PLS) to 7.15 percent.

The share of bad loans serviced by servicing organizations of independent mortgage banks (IMB) increased by 2 basis points to 3.48 percent, while the share of loans in custody service portfolios decreased by 1 basis point to 3.35 percent.

The share of abstinence loans remained virtually unchanged.because both new requests and exits were running slower than the previous week. In fact, exits were the slowest in over a year, ”said Mike Fratantoni, senior vice president and chief economist for the MBA. – point increase in their share. Portfolio and PLS loans currently account for nearly 50 percent of all deferred custody loans and almost 40 percent of IMB deferred loans, highlighting the importance of this category of investors. ”

The latest MBA survey on tolerance and call volume covers the period from August 9-15, 2021 and represents 74 percent of the primary mortgage service market (36.9 million loans).

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