Mortgage application activity is in decline while forbearance levels are on the rise, according to data reports from the Mortgage Bankers Association (MBA).
The Market Composite Index, the MBA’s measure of mortgage loan application volume, decreased 6.7% on a seasonally adjusted basis for the week ending Oct. 18 compared to the previous week. On an unadjusted basis, the index decreased by 7%.
Both the seasonally adjusted and unadjusted Purchase Index were down by 5% from one week earlier, while the latter was also 3% higher than the same week one year ago. The Refinance Index decreased 8% from the previous week, although it was also 90% higher than the same week one year ago. The refinance share of mortgage activity decreased to 45.7% of total applications from 46.5% the previous week.
Among the federal programs, the FHA share of total applications increased to 16.9% from 15.9% the week prior while the VA share of total applications decreased to 15.8% from 16.2% and the USDA share of total applications remained unchanged at 0.4%.
Separately, the MBA’s monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance increased to 0.34% as of Sept. 30. According to MBA’s estimate, 170,000 homeowners are in forbearance plans.
The share of Fannie Mae and Freddie Mac loans in forbearance remained the same as the previous month at 0.13% in September while Ginnie Mae loans in forbearance increased by 10 basis points to 0.76%, and the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 0.37%.
“The percentage of loans in forbearance increased for the fourth consecutive month,” said Marina Walsh, MBA’s vice president of industry analysis. “Since May 2024, Ginnie Mae loans in forbearance increased by almost 40 basis points, compared to six basis points for portfolio and PLS loans and three basis points for Fannie and Freddie loans. We are seeing some weakening in loan performance, particularly among government products. Overall government loan performance reached a new low for the year in September. In addition, the share of government post-forbearance workouts that are current dropped considerably over the past four months. These trends indicate that some homeowners are exhibiting signs of distress – whether because of economic hardships, natural disasters, or other reasons.”
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