New Mortgage Applications Down and Loan Forbearance Numbers Up, Says MBA

New Mortgage Applications Drop by 12 Percent from Last Year

According to the most recent Mortgage Bankers Association Builder Application Survey data for April 2020, mortgage applications for new U.S. home purchases decreased 12 percent compared from a year ago. Compared to March 2020, applications decreased by 25 percent. This change does not include any adjustment for typical seasonal patterns.

The seasonally adjusted estimate for April is a decrease of 23.5 percent from the March pace of 697,000 units. On an unadjusted basis, MBA estimates that there were 51,000 new home sales in April 2020, a decrease of 28.2 percent from 71,000 new home sales in March.

Four Million Homeowners in Forbearance Plans

Meanwhile, the Mortgage Bankers Association’s latest Forbearance and Call Volume Survey, revealed that the total number of U.S. loans now in forbearance increased from 7.54% of servicers’ portfolio volume in the prior week to 7.91% as of May 3, 2020. According to MBA’s estimate, almost 4 million homeowners are now in forbearance plans.

Mortgages backed by Ginnie Mae again had the largest overall share of loans in forbearance by investor type (10.96%). The number of loans in forbearance for depository servicers rose to 8.75%, while the number of loans in forbearance for independent mortgage bank (IMB) servicers increased to 7.54%.

“With the calendar turning to May, the share of loans in forbearance increased, but the pace of the increase and incoming forbearance requests continued to slow,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression. It will not be surprising if the forbearance numbers continue to rise. As we anticipated, FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”