Mortgage application activity recorded a slight increase thanks primarily to an increase in refinancing requests, according to new data from the Mortgage Bankers Association for the week ending July 14.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.1% on a seasonally adjusted basis from one week earlier; on an unadjusted basis, the index saw a more robust 27% increase compared with the previous week. The seasonally adjusted Purchase Index was down by 1% from one week earlier but the unadjusted index soared 24% – although the latter was also 21% lower than the same week one year ago.
The Refinance Index increased 7% from the previous week but was 32% lower than the same week one year ago. The refinance share of mortgage activity increased to 28.4% of total applications from 26.8% in the previous week.
Among the federal program, the FHA share of total applications increased to 13.6% from 13.3% the week prior while the VA share of total applications decreased to 12.1% from 12.6% the week prior and the USDA share of total applications increased to 0.5% from 0.4%.
MBA’s Vice President and Deputy Chief Economist Joel Kan observed, “Despite last week’s lower rates, purchase applications decreased, as home purchase activity is still being held back by low housing supply and rates that are still much higher than a year ago.”
Separately, the MBA’s monthly Loan Monitoring Survey determined the total number of loans now in forbearance decreased by 5 basis points to 0.44% of servicers’ portfolio volume, as of June 30. According to MBA’s estimate, 220,000 homeowners are in forbearance plans.
“Mortgage forbearance has declined because most homeowners have maintained or improved their financial health,” said Marina Walsh, MBA’s vice president of industry analysis. “Recent reporting by the U.S. Bureau of Labor Statistics shows continued job growth in June, and a 3.6% unemployment rate. The employment situation tracks with homeowners’ ability to make mortgage payments. MBA forecasts a slowing in the economy that could give rise to higher unemployment and mortgage delinquencies later in the year. Forbearance remains a viable loss mitigation option for homeowners who may struggle under more challenging economic conditions.”
