Mortgage applications recorded a scant uptick in the latest data report from the Mortgage Bankers Association (MBA) that covers the week ending June 16.
The Market Composite Index, a measure of mortgage loan application volume, saw a 0.5% rise on a seasonally adjusted basis from one week earlier, although the unadjusted index was down by 1%. The seasonally adjusted Purchase Index increased 2% from one week earlier but the unadjusted index dipped by a mere 0.1% — the latter was also 32% lower than the same week one year ago.
The Refinance Index decreased 2% from the previous week and was 40% lower than the same week one year ago. The refinance share of mortgage activity decreased to 26.9% of total applications from 27.3% the previous week.
Among the federal programs, the FHA share of total applications increased to 13.3% from 13.0% percent the week prior while the VA share of total applications decreased to 11.9% from 12.6% and the USDA share of total applications decreased to 0.4% from 0.5%.
Separately, the MBA’s Builder Application Survey data for May saw applications for new home purchases were up by 8% from April and up by 16.6% from one year ago. By product type, conventional loans composed 67% of loan applications, FHA loans composed 22.8%, VA loans accounted for 10% and RHS/USDA loans composed 0.3%. The average loan size of new homes increased from $401,756 in April to $403,581 in May.
“Purchase activity for newly built homes was strong in May, with builders continuing to bring homes to the market and buyers keen to act on available units,” said Joel Kan, MBA’s vice president and deputy chief economist. “Applications for purchase loans were up on a monthly basis and increased annually for the fourth consecutive month. Our estimate of new home sales also jumped in May, up 16% to the fastest pace of new home sales in 15 months.”
As for current mortgage holders facing financial stress, MBA’s Loan Monitoring Survey determined the total number of loans now in forbearance decreased by 2 basis points from 0.51% of servicers’ portfolio volume in the prior month to 0.49% as of May 31. According to MBA’s estimate, 245,000 homeowners are in forbearance plans.
In May 2023, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.23% while Ginnie Mae loans in forbearance decreased 5 basis points to 1.06% and the forbearance share for portfolio loans and private-label securities decreased 3 basis points to 0.58%.
“The number of loans in forbearance is reaching levels not seen since the beginning of March 2020, prior to the passage of the CARES Act,” said Marina Walsh, MBA’s vice president of industry analysis. “Today, more than 96% of homeowners are current on their mortgages, thanks to the favorable jobs market and the success of loss mitigation options over the past three years.”
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