Mortgage Volume Declined in May
Written By: Joel Palmer, Op-Ed Writer
Three separate reports showed mortgage origination volume declined in May due to a dearth of housing inventory and hesitancy to refinance.
Fannie Mae and Freddie Mac released volume summaries for May last week. Fannie reported $93.3 billion in mortgage loan volume during the month, down from $106.4 billion the month before. In May 2020, Fannie reported mortgage loan volume $115.6 billion.
Freddie Mac’s single-family refinance loan purchase and guarantee volume was $57.1 billion in May. That was down from $82.9 billion in April.
Black Knight Inc., a software, data and analytics company that serves the mortgage and real estate industries, said its pipeline data for May showed overall rate locks down 4.7 percent from April. There was also an 8.2 percent decline in rate/term refinance locks.
“Though interest rate offerings trended downward across all mortgage products in May, overall rate locks were still down across the board,” said Black Knight Secondary Marketing Technologies President Scott Happ.
“The severity of shortages in for-sale inventory seems to be a key driver behind the 3.4 percent decline in purchase locks from April, but the dip in refinance locks seems to have more to do with borrower psychology. Certainly, February’s rise in rates drained some of the excitement in the market, but despite significant increases in refinance incentive since then, refinance activity simply hasn’t rebounded as expected.”
Due to a recent decline in market rates, the number of potential refinance candidates grew from 12 million to over 14 million between March and May. However, its data showed refinance rate locks falling 27 percent over the same period.
The refinance share of the market mix dropped in May, accounting for just 44% of the month’s origination activity, Black Knight said. On an annual basis, only rate/term refinance lending is down from last April (-45%), whereas both cash-outs (+32%) and purchase loans (+43%) are up year-over-year.
Freddie Mac’s summary report also showed that:
Its total mortgage portfolio increased at an annualized rate of 8.6 percent in May. It rose 13.2 percent in April and 27.2 percent in March.
The aggregate unpaid principal balance (UPB) of its mortgage-related investments portfolio decreased by approximately $15.9 billion in May.
Freddie Mac mortgage-related securities and other mortgage-related guarantees increased at an annualized rate of 12.9 percent in May.
Its single-family delinquency rate decreased from 2.15 percent in April to 2.01 percent in May. Its multifamily delinquency rate decreased from 0.20 percent in April to 0.19 percent in May.
According to Fannie Mae’s May summary report:
Fannie Mae's guaranty book of business increased at a compound annualized rate of 8.0 percent in May. It grew 6.5 percent in April and 17.1 percent in March.
Its conventional single-family serious delinquency rate decreased 14 basis points to 2.24 percent in May. Its multifamily rate decreased 2 basis points to 0.53 percent.
As of May 31, 2.2 percent and 2 percent of its single-family conventional book of business based on unpaid principal balance and loan count, respectively, was in active forbearance, the vast majority of which were related to COVID-19; 9 percent of these loans in forbearance (based on loan count) were current.
As of May 31, 0.3 percent of its multifamily guaranty book of business based on unpaid principal balance was in an active forbearance, the vast majority of which were related to COVID-19.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
