The Mortgage Market Composite Index decreased 2.6% this week, while the refinance share of mortgage activity is at its lowest level in the last ten years.

The Mortgage industry has seen a big drop in numbers at a fundamental level as loan applications and related-activity have dropped, with an increase in interest rate. A measure of mortgage loan application volume, the Market Composite Index, saw a 2.6% decrease on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The refinance share of mortgage activity decreased to 35.7 percent of total applications, its lowest level since December 2000, from 35.9 percent the previous week. The seasonally adjusted Purchase Index also decreased by 2 percent from one week earlier.

On the other hand, on a positive note, according to the Mortgage Bankers Association (MBA), the delinquency rate was down 54 basis points from the previous quarter. This was seen across all loans types – conventional, VA, and in particular FHA. Some of these loans saw a drop in delinquency as the effects of last September’s hurricane slowly subsided over the last few months.

Strong economy, low unemployment rate, effects of tax cuts, home price increase are some positives that helped push delinquencies down in the first quarter.

The drop in the delinquency rate is a result of a strong economy, low unemployment rate, effects of tax cuts, and home price appreciation. All of these factors have, in some way or other, provided a sense of optimism amongst consumers looking for loans and mortgages.

Of course, even with these positive sentiments, there are some offsetting issues – such as aging of loan portfolios; higher interest rates that limit a borrower’s rate-term refinancing options; higher energy prices stretching of housing affordability has given limited supply, and the easing of credit overlays as mortgage market conditions have changed.

But all together, in the short to medium term, if this trend continues, we can anticipate a strong economic outlook. And a potential strengthening of the mortgage industry.

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