The volume of mortgage applications for the week ending July 9 showed largest weekly gain since first full week of 2021.
The Mortgage Bankers Association (MBA) said its Market Composite Index, which measures this volume, rose 16.0% on a seasonally adjusted basis. Like the week ending January 8, last week’s data represented a recovery from a major national holiday, but lower interest rates likely played a role as well. The pre-seasonally adjusted increase was 7.0 percent.
Refinancing index rose 20 percent compared with the previous week, but was 29 percent lower than the same week a year ago. The share of refinancing of mortgage activities increased to 64.1 percent of the total number of applications from 61.6 percent in the previous week, which is the highest share of refinancing since March 5.
Purchase index increased by 8.0% compared with a week earlier, but was down 13.0 percent before adjustment and was 29 percent lower than the same week a year ago.
Refi index vs 30-year fixed
Shopping Index vs Fixed 30-Years
“Last week, the total number of applications increased, largely due to an increase in refinancing, as rates fell again. Treasury yields have declined over the past month as investors remain concerned about the COVID-19 option and slowing economic growth, ”said Joel Kahn, MBA deputy vice president. economic and sectoral forecasting. “As a result, mortgage rates fell for the second week in a row, with the 30-year fixed rate hitting 3.09 percent, the lowest level since February 2021. Refinancing applications increased more than 20 percent last week after adjusting for the 4th of July holiday, boosted by a 23% increase in regular refinancing applications. delayed release of orders from the previous week, when rates also fell, but there was not much response for refinancing applications. ”
Kahn added: “Purchase orders increased last week, but average loan sizes fell to their lowest level since January 2021. We continue to see the ebb and flow as demand for housing remains strong but stocks for sale remain low. However, lower rates can help some home buyers complete their purchases, especially first-time home buyers. The year-over-year comparison has dropped significantly for both purchase and refinancing applications as they were compared to a week without a weekend in 2020. ”
FHA share of the total number of applications dropped to 9.5 percent from 9.8 percent, while VA’s share fell to 10.3 percent from 10.8 percent. The share of the USDA did not change and amounted to 0.5 percent. The average balance on all loans rose from $ 335,400 to $ 345,900, and the balances on purchase mortgages fell from $ 405,300 to $ 398,600.
IN average contractual interest rate for 30-year fixed rate mortgages (FRM) with corresponding loan balances of $ 548,250 or less, it decreased to 3.09 percent from 3.15 percent, down a point to 0.37 from 0.38. The effective rate fell to 3.20 percent.
The rate for giant 30-year FRMs, loans with balances in excess of the appropriate limit, fell to 3.16 percent from 3.20 percent. with a decrease in points to 0.27 from 0.28. The effective rate fell to 3.23 percent.
The FHA-backed 30-year FRM had an average rate of 3.15 percent, up from 3.17 percent the previous week. Points fell to 0.29 from 0.32 and the effective rate fell to 3.23 percent.
The contract rate for a mortgage with a fixed interest rate for 15 years was 2.48% at 0.32 points. In the previous week, it was 2.52 percent at 0.23 points. The effective rate fell to 2.56 percent.
The average contract interest rate of a 5/1 Adjustable Rate Mortgage (ARM) increased to 3.02 percent from 2.94 percent. with a decrease in points to 0.32 from 0.34. The effective rate increased to 3.13 percent. The share of ARM activity increased to 3.5 percent of the total number of applications from 3.3 percent a week earlier.
The MBA’s Weekly Mortgage Application Survey has been running since 1990 and covers over 75 percent of all US home applications. Among the respondents are mortgage bankers, commercial banks and charities. 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.
According to the latest MBA study on tolerance and call volume, the total number of loans subject to deferral decreased by 11 basis points. up to 3.76% of the portfolio of service companies as of July 4, 2021. The MBA estimates 1.9 million homeowners remain in abstinence plans. Of these, 10.8% are at the initial planning stage, and 82.7% are on the extension of the abstinence period. The remaining 6.5% is due to repeated participation in the program.
The proportion of loans to Fannie Mae and Freddie Mac in deferral fell 8 basis points to 1.91 percent, while loans to Ginnie Mae (FHA and VA) fell 32 basis points to 4.78 percent. Loans serviced for bank portfolios and private label securities (PLS) increased 2 basis points to 7.94 percent. The share of bad loans serviced by independent mortgage banks (IMB) and custodian services decreased by 13 basis points to 3.87 percent and 3.98 percent, respectively.
“Exit patience has increased in the week of July 4th.th holiday in the fastest pace since the beginning of April,said Mike Fratantoni, senior vice president and chief economist for the MBA. – The number of new requests remained very low, which led to a significant drop in the proportion of loans subject to deferral, especially for Ginny Mae loans, which also continue to be affected by the buybacks of bad loans. … These loans are accounted for as post-repurchase portfolio loans. ”
Fratantoni added: “The mortgage delinquency rate across the entire service portfolio decreased in June compared to May. However, the delinquency rate increased slightly for homeowners who completed the workout. per year, while almost 60 percent of borrowers have a grace period of more than 12 months. These borrowers may have more problems getting back to regular payments. ”
The latest MBA study on tolerance and application rates covers the period from June 28 to July 4, 2021 and accounts for 74 percent of the 36.9 million loans in the primary mortgage market.