The uptick helped bolster the books at one major wholesale lender
Mortgage loan application volume and refinances were both down this week, while the 30-year fixed mortgage rate increased for the third straight week. The one bright spot: Government purchases are up as borrowers continued to take out more government-backed loans – a trend illustrated by the nation’s largest wholesale lender.
According to the Mortgage Bankers Association, mortgage applications decreased 0.8% from the prior week, it revealed in the group’s Weekly Mortgage Applications Survey for the week ended Aug. 11. Here’s how the numbers stack up:
- Mortgage applications decreased 0.8% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Aug. 11. On an unadjusted basis, the Market Composite Index decreased 2% compared with the previous week.
- The Refinance Index decreased 2% from the previous week and was 35% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2% from one week earlier.
- The unadjusted Purchase Index decreased 2% compared with the previous week and was 26% lower than the same week one year ago.
- The 30-year fixed mortgage rate increased for the third straight week, reaching 7.16% –the highest rate since 2001 and matching the October 2022 rate.
“Treasury rates were elevated again last week following mixed data on inflation and more indication of resiliency in the economy, which may pose a challenge to the Federal Reserve’s efforts to lower inflation,” Joel Kan, the Mortgage Brokers Association’s vice president and deputy chief economist, said in a prepared statement. “Overall applications decreased because of these higher rates, as both purchase and refinance applications ended the week at their lowest levels since February 2023.”
Government purchases bucking the downward trend
And then there are government purchases – the one bright spot in an otherwise rather dismal report. Such purchases rose 2.4% over the week, driven by increases in both FHA and VA purchase categories, per the MBA. “The ARM share of applications rose slightly to 7%, the highest since April 2023, as borrowers look for relief from higher fixed rates.”
The uptick in government loans could be seen on the balance sheet of United Wholesale Mortgage – the nation’s largest wholesale lender – during its recent second quarter earnings investors call. Responding to a reporter’s question, UWM’s CEO, Mat Ishbia, explained the reason for the activity surge – a 60% quarter-over-quarter increase at his firm.
“The FHA world competes a little bit with the home affordable programs from FHFA [Federal Housing Finance Agency], which is Fannie Mae and Freddie Mac,” he explained. “And so as Fannie Mae and Freddie Mac do less to help affordable homes, those borrowers go FHA. And if those borrowers go FHA, FHA is the best option for them.”
FHA loan originations volume up at UWM
Ishbia noted a recent reduction in the FHA’s insurance premiums has helped spur government-backed loan activity. The Department of Housing and Urban Development (HUD), through the FHA, earlier this year reduced its annual mortgage insurance premium (MIP) from 0.85% to 0.55% for most new borrowers. “Also, FHA did cut their MI [mortgage insurance] if you remember… which actually made it so it was more advantageous sometimes to use an FHA loan than a conventional loan. And so brokers are smart, borrowers are smart – they’re going to go to the cheapest payment.”
Ishbia said he sees another big opportunity in catering to military veterans. “Veterans is still another big opportunity,” he said. “We think veterans don’t necessarily get the best opportunities and we’ve got to get them to FindAMortgageBroker.com, to educate veterans because they can save a lot of money too.”
Powered by UWM, FindAMortage.com was created from the belief that working with an independent mortgage broker is the best move for homebuyers, UWM officials wrote on its website. The site yields the ability for a borrower to shop 100s of loan options on their behalf to find a monthly payment that fits their needs.
Time savings were a main consideration in creating the site, according to UWM. Many borrowers, officials said, don’t think about their mortgages until after they have found a home – causing unwanted and potentially costly delays in the closing process. In using FindAMortgageBroker.com, borrowers are teamed with independent mortgage brokers at the very beginning of the homebuying process.
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