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Mortgage Applications Down, Mortgage Default Rate Up

Phil Hall
Aug 17, 2016
​First Lenders Data Inc. has announced that it has introduced a change to its Equity Protection Program for lenders using its FirstClose Report

There was a bit of a seesaw action on display in the latest mortgage industry data.

The Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug. 12 saw mildly dismal news. The Market Composite Index fell by four percent on a seasonally adjusted basis and fell by five percent on an unadjusted basis compared with the previous week. The seasonally adjusted Purchase Index dropped by four percent from one week earlier to the lowest level since February 2016, while the unadjusted Purchase Index dipped by five percent compared with the previous week. The Refinance Index also took a four percent slide from the previous week, but the refinance share of mortgage activity increased to 62.6 percent of total applications from 62.4 percent the previous week.

Among the government home loan programs, results were mixed: the FHA share of total applications decreased to 9.6 percent from 100 percent the week prior, but the VA share of total applications increased to 13.2 percent from 13 percent the week prior and the USDA share of total applications remained unchanged at 0.6 percent.

Separately, the latest data from the S&P/Experian Consumer Credit Default Indices found the first mortgage default rate for July was 0.66 percent, up one basis point from the prior month. The default rate for second mortgages in July was 0.44 percent, down four basis points from June. The composite rate of consumer credit defaults was 0.83 percent in July, up one basis point from the previous month.

“The consumer economy is growing with few significant difficulties in accessing credit,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Personal incomes rose 2.7 percent in the last year and retail sales, excluding autos, were up 2.3 percent in the year to July. Employment is increasing, median wage growth, as reported by the Atlanta Federal Reserve Bank, is 3.6 percent at annual rates, and consumer sentiment continues at high levels. Consumers’ use of debt has expanded with both consumer credit and mortgage debt balances rising.”

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