Purchase mortgage applications across the country continued to rise last week, while the percent of mortgages in forbearance had the smallest increase since March, according to the Mortgage Bankers Association’s latest surveys.
The MBA’s seasonally adjusted Purchase Index, part of its Weekly Mortgage Applications Survey, showed that purchase mortgage applications for the week ending May 29 increased 5 percent from one week earlier, the seventh consecutive weekly increase. The index was adjusted for the Memorial Day holiday. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 18 percent higher than the same week one year ago.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “However, there are still many households affected by the widespread job loss and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”
The Refinance Index decreased 9 percent from the previous week, though it was 137 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 59.5 percent of total applications from 62.6 percent the previous week.
“In contrast to the upswing in purchase activity, refinance applications fell for the seventh consecutive week – even as the 30-year fixed rate hit another MBA survey-low of 3.37 percent,” Kan said. “After reaching a peak of 76 percent earlier this year, refinances now account for less than 60 percent of activity, and the index is now at its lowest level since February 21.”
Overall, the Market Composite Index, a measure of total mortgage loan application volume, decreased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 14 percent compared with the previous week.
The MBA’s latest Forbearance and Call Volume Survey, which covered the week ending May 24, showed that 8.46 percent of loans were in forbearance, up from 8.36 percent the previous week. This was the smallest jump in forbearances since the week of March 9. The MBA estimates that just over 4.2 million loans are in forbearance.
Mortgages backed by Ginnie Mae again had the largest overall share of loans in forbearance by investor type (11.82 percent) and the largest increase from the previous week (22 basis points). The number of loans in forbearance for depository servicers rose to 9.19 percent, while the number of loans in forbearance for independent mortgage bank servicers increased to 8.21 percent.
“MBA’s survey continues to indicate that fewer homeowners are seeking forbearance as more states across the country reopen their economies and prospects begin to improve. The share of loans in forbearance increased by only 10 basis points over the week of May 24,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “Policy support for households, including expanded unemployment insurance benefits and other transfers, have helped many stay on their feet during this crisis. With 11.82 percent of Ginnie Mae loans currently in forbearance, FHA and VA borrowers are struggling the most.”
Calls to mortgage servicers decreased last week from 8.6 percent to 6.6 percent. This was the lowest since March, a sign that fewer homeowners were calling to seek forbearances.
