Mortgage Purchase Applications Drop

Mortgage applications ballooned 5.1% from the previous week, according to data from the Mortgage Bankers Association's (MBA) for the week ending July 10, 2020. Adjustments for July 4 holiday were incorporated into last week’s results.

From the week before, on an unadjusted basis, the Index swelled 16%, with a jump of 12% from the prior week in the Refinance Index. From the same time a year ago, it climbed 107%. There was a 6% drop in the seasonally adjusted Purchase Index from the week before while the unadjusted Purchase Index went the other way, jumping 5% from the previous week. From the same week a year ago, it was higher by 16%.

Mortgage rates continued their downward trend, with the 30-year fixed rate falling seven basis points to 3.19%—another record low in MBA's survey and 63 basis points lower than the recent high in late March, said Joel Kan, MBA's AVP of Economic and Industry Forecasting.

“The drop in rates led to a jump in refinance activity to the highest level in a month, with refinance loan balances also climbing to a high last seen in March,” he said. “While there was a drop of purchase applications over the week, they remained 15% higher than a year ago. It maintained a string of eighth consecutive week of year-over-year increases. Despite the continued economic uncertainty and high unemployment caused by the ongoing pandemic, purchase activity remains relatively strong,”

Through it all, there’s been a drop in mortgage fraud, according to The MReport.

For the first time in 15 months, the Loan Application Defect Index bumped up, climbing 1.6% in May relative to the prior month, said First American Deputy Chief Economist Odeta Kushi. “Both refinance and purchase loan fraud risk increased as the coronavirus pandemic continued to impact the mortgage market.”

On a yearly basis, Augusta, Georgia, was minus-33%; Provo, Utah, 32.9%; and South Carolina, 30.3%.

When it comes to the jump in fraud risk, employment and income fraud, which experienced a spike of 10% and 7%, respectively, compared to the month before, are the two primary culprits, said Kushi.

“Higher-income and employment fraud risk is likely a result of applicants, whose job and income may be affected by the pandemic’s impact on the economy, attempting to hide that impact from the lender,” she said.