Refinancing Volume Surges on Slight Rate Drop

Borrowers looking
to refinance were quick to take advantage of a slight drop in interest rates
last week.  The Mortgage Bankers Association
(MBA) said its Market Composite Index, a measure of mortgage loan application
volume, jumped 8.1 percent on a seasonally adjusted basis during the week ended
January 29, and was up 10 percent on an unadjusted basis.  The index had declined in each of the two
previous weeks.

The
Refinance Index increased 11 percent from the previous week, also reversing two
weeks of losses, and was 60 percent higher than the same week one year ago. The
refinance share of mortgage activity increased to 71.4 percent of total applications
from 70.7 percent the previous week.

The
seasonally adjusted Purchase Index ticked up 0.1 percent and was 8 percent
higher on an unadjusted basis. The index was 16 percent above its level the same
week in 2020.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

 

“After
increasing for three consecutive weeks, the 30-year fixed mortgage rate dropped
3 basis points to 2.92 percent. The one-week reversal in the recent upswing in
rates drove an increase in both conventional and government refinance activity,
as borrowers continue to lock in these historically low rates. MBA’s refinance
index hit its highest level since March 2020 and jumped 60 percent year-over-year,”
said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity was unchanged last week, with a 1 percent increase in
conventional applications offset by a 3 percent decline in government
applications. Average purchase loan amounts in early 2021 continue to rise
across all loan types, driven by a strong pace of home sales, tight housing
inventory and high home price growth.
Conventional, FHA and VA purchase loan
sizes all set new survey records last week.”

The FHA share of total applications
decreased to 9.1 percent from 9.4 percent the prior week prior and the VA share
dipped to 12.1 percent from 12.4 percent. The USDA share of total applications
decreased to 0.4 percent from 0.5 percent. The average balance of a mortgage
was $332,100 compared to $329,700 a week earlier while the average balance of a
purchase mortgage increased $400 to $398,600.  

While the conforming 30-year mortgage
caught a rate decrease last week, other rates were mixed. The average contract
interest rate for 30-year loans with origination balances at or below the conforming
limit of $548,250 decreased to 2.92 percent from 2.95 percent, with points
remaining at 0.32. The effective rate decreased to 3.01 percent.   

The average contract interest rate for
jumbo 30-year fixed rate mortgages (FRM), loans with balances greater than the
conforming limit, decreased to 3.12 percent from 3.17 percent, with points increasing to 0.32 from
0.31. The effective rate was 3.22 percent. 

Thirty-year
FRM backed by the FHA saw a 6-basis point increase to 2.94 percent. Points
decreased to 0.29 from 0.34 and the effective rate rose to 3.03 percent.  

The average contract interest rate for
15-year FRM was 2.44 percent with 0.32 point. The prior week the rate was 2.43
percent, also with 0.32 point. The effective rate increased to 2.53 percent.  

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) rose to
2.88 percent from 2.60 percent, with
points increasing to 0.46 from 0.38. The effective rate increased to 3.05
percent. The ARM share of activity was unchanged at 2.2 percent of total
applications.

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.

The
number of loans in active forbearance plans was unchanged from the previous
week according to MBA’s latest Forbearance and Call Volume Survey. As of January
24, there were 2.7 million mortgages in forbearance, 5.38 percent of all mortgage
loans.  By stage, 18.07 percent are in the initial
forbearance plan stage, while 79.30 percent are in an extension. The remaining
2.64 percent were program reentries.   

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.10
percent
– a 1-basis-point
improvement. Ginnie Mae (FHA and VA) loans in forbearance decreased 10 basis
points to 7.51 percent, while the forbearance share for portfolio loans and
private-label securities (PLS) increased by 22 basis points to 9.16 percent.
The percentage of loans in forbearance for independent mortgage bank (IMB)
servicers dipped 2 basis points to 5.77 percent, and the percentage of loans in
forbearance for depository servicers grew by 1 basis point to 5.37 percent.

“The share of loans in forbearance was unchanged in the
prior week, with a gain in the portfolio/PLS loan segment offset by declines in
the Ginnie Mae and GSE investor loan categories. When servicers buy out
delinquent loans from Ginnie Mae pools, they are reclassified as portfolio
loans, which can lead to a decrease in the Ginnie Mae forbearance share and an
increase in the portfolio/PLS share,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While
new forbearance requests dropped slightly, the rate of exits from forbearance
was at the slowest pace since MBA began tracking exit data last summer.” 

Fratantoni added, “Overall, the forbearance
numbers have been little changed over the past few months. Homeowners still in
forbearance are likely facing ongoing challenges with lost jobs, lost income,
and other impacts from the pandemic.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from January 18 through January 24, 2021 and
represents 74 percent of the first-mortgage servicing market (37.1 million
loans).

 

Source: mortgagenewsdaily.com

Forbearance rate slowly descends to 5.35%

The U.S forbearance rate is falling, though not as quickly as it once was.

Data released on Monday by the Mortgage Bankers Association showed that the share of servicers’ portfolio volume in forbearance fell 3 basis points to 5.35% last week.

For the third month in a row, the MBA estimated 2.7 million homeowners are in some form of forbearance, and for almost four months now, forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

However, in the current environment, any sign of forbearance waning is a welcome one. Last week every investor class managed to see declines, with Fannie Mae and Freddie Mac once again claiming the lowest forbearance rate at 3.07%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, also fell 5 basis points to 7.46%. And even though servicers continued to buy out delinquent loans from the Ginnie Mae pool (subsequently reclassifying them as portfolio loans) the forbearance share for portfolio and private-label securities also managed to fall to 9.14%.


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In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

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The MBA data shows that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments. According to Mike Fratantoni, the MBA’s chief economist, almost 14%of homeowners in forbearance were reported as current on their payments at the end of last month, but that share has declined nearly every month from 28% in May.

“While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat, but remained much lower than in recent months. We are anticipating a sharp increase in exits in March and April as borrowers hit the 12-month expiration of their forbearance plans,” Fratantoni said.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped.

To Fratantoni, servicers and policy makers need to be looking at the long-term unemployed, especially those who have been actively looking for work for 27 weeks or more as reported in January’s job data.

“These are the homeowners who are likely to still be in forbearance and
need additional support until the job market recovers to a greater extent,” Fratantoni said.

But economists are still showing signs of confidence in the market. HousingWire’s lead analyst, Logan Mohtashami, noted with an improving employment situation comes an economic improvement well past forbearance’s peak. Couple that with strong credit profiles from homeowners and nested equity and Mohtashami can outperform on rising home prices.

“This isn’t 2008 all over again. That recovery was slow, but today our demographics are better, and our household balance sheets are healthier. The fiscal and monetary assistance now is hugely improved from what we saw after 2008. We have everything we need to get America back to February 2020 jobs levels; we just need time,” Mohtashami said.

Source: housingwire.com

Forbearances hold steady as exits slow

The U.S. forbearance rate held relatively steady last week, rising one basis point to 5.38% of servicers’ portfolio volume, according to a survey from the Mortgage Bankers Association released on Monday.

The virtually unchanged rate of forbearance volume can be attributed to a stalemate between steady declines in almost every investor class and a whopping 26 basis point jump in portfolio loans and private-label securities, bringing their forbearance share to 8.94%.

Fannie Mae and Freddie Mac, on the other hand, once again claimed the smallest forbearance rate at 3.11% while Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, fell 6 basis points to 7.61%.

“The good news is that the forbearance numbers for GSE loans continues to decline more consistently, as these borrowers typically have stronger credit and more stable employment,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped, and Fratantoni noted the rate of exits from forbearance also slowed in the week prior.


Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

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Data analytics company Black Knight noted that last week’s sluggish forbearance removals were the second lowest weekly removal volume observed to date since the company began monitoring the situation in April. 

“Removal rates have also slowed noticeably following the six-month point of forbearance plans,” said Andy Walden, director of market research for Black Knight. “This suggests that those borrowers who remain in forbearance were likely more heavily impacted by the economic downturn and thus are less likely to leave such plans before the full allowable 12-month period runs down.”  

Of the cumulative forbearance exits for the period from June 1, 2020 through Jan. 17, 2021, 28.7% represented borrowers who continued to make their monthly payments during their forbearance period – a one basis point drop, according to the MBA.

During that same time period, those who exited without a loss mitigation plan in place also fell slightly to 13.4% from 13.5% the week prior.

The MBA once again estimates there are now 2.7 million Americans in some form of forbearance, and that number has remained unchanged for nearly two months.

According to a recent paper from researchers at the business schools of Columbia University, Northwestern University, Stanford University, and the University of Southern California, by October 2020, debt forbearance allowed U.S. consumers to miss about $43 billion of debt payments. If trends continue, more than 60 million consumers would miss about $70 billion of their debt payments by the end of the first quarter of 2021.

Source: housingwire.com

Mortgage forbearance rate continues to drop

The U.S. forbearance rate fell nine basis points last week to 5.37% of servicers’ portfolio volume, according to a survey from the Mortgage Bankers Association on Monday.

Though every investor class did manage to see a decline in rates, Fannie Mae and Freddie Mac once again claimed the smallest forbearance rate at 3.13%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, have fluctuated greatly in the past several months but saw the greatest fall in portfolio share last week – down 18 basis points to 7.85%. Despite a nine basis point drop, portfolio loans and private-label securities (PLS) still boast the largest share with 8.68% share in forbearance.

Although marginal declines are taking place, the rate of exits remains much lower than what was seen in October and early November, noted Mike Fratantoni, MBA’s senior vice president and chief economist.

And borrowers are continuing to push out payments. Over 80% of total loans in forbearance are in some form of extension, up from 79% the week prior, and re-entries are also increasing.


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“Job market data continue to indicate weakness, and that means many homeowners who remain unemployed will need ongoing relief in the form of forbearance,” Fratantoni said. “While new forbearance requests remain relatively low, the availability of relief remains a necessary support for many homeowners.”

The MBA still shows data that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped.

Now, of the cumulative forbearance exits for the period from June 1, 2020 through Jan. 10, 2021, 28.8% represented borrowers who continued to pay – down from 29.1% the week prior.

During that same time period, those who exited without a loss mitigation plan in place inched up to 13.5% from 13.3% the week prior.

Source: housingwire.com