An increasing number of people are taking out mortgages while a rising level of homeowners aren’t paying their mortgages.
The Market Composite Index, the Mortgage Bankers Association’s (MBA) measure of mortgage loan application volume, increased 1.1% on a seasonally adjusted basis for the week ending May 9 compared to the previous week. On an unadjusted basis, the index increased 1% compared with the previous week.
Both the seasonally adjusted and unadjusted Purchase Index increased 2% from one week earlier – the latter was also 18% higher than the same week one year ago. The Refinance Index dipped by a slight 0.4% from the previous week and was 44% higher than the same week one year ago. The refinance share of mortgage activity decreased to 36.4% of total applications from 37.1% the previous week.
Among the federal programs, the FHA share of total applications increased to 17.4% from 16.4% the week prior while the VA share of total applications inched up to 13.4% from 13.3% the week prior and the USDA share of total applications remained unchanged at 0.5%.
Mike Fratantoni, MBA’s senior vice president and chief economist, observed, “Refinance volume was little changed for the week, with a small increase in government refinances, and a decrease in conventional refinances. The news for the week was the growth in purchase applications, up 2.3% and almost 18% higher than last year’s pace. Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy, unlike the last two years, and this supply is supporting more transactions. There was a notable gain in government purchase applications, up almost 5% for the week and 40% on an annual basis.”
The MBA also reported the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.04% of all loans outstanding at the end of the first quarter. This is an increase of 6 basis points from the fourth quarter of 2024 and up 10 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the first quarter rose by 5 basis points to 0.20%.
“There were mixed results for mortgage performance in the first quarter of 2025 compared to the end of 2024. Delinquencies on conventional loans increased slightly, while mortgage delinquencies on FHA and VA loans declined,” said Marina Walsh, MBA’s vice president of industry analysis. “Foreclosure inventories increased across all three loan types, and particularly for VA loans. Despite certain segments of borrowers having difficulty making their mortgage payments, the overall national delinquency and foreclosure rates remain below historical averages for now.”
Walsh added, “The percentage of VA loans in the foreclosure process rose to 0.84%, the highest level since the fourth quarter of 2019. The increase from the previous quarter marks the largest quarterly change recorded for the VA foreclosure inventory rate since the inception of MBA’s survey in 1979.”
