Mortgage rates, which were already perched at historical lows, fell further this week. But that wasn’t enough to motivate mortgage shoppers to check in with their local loan originators about financing a home purchase or refinancing an existing loan. While a look at Treasury market activity suggests rates could be higher in next week’s reports, eurozone volatility could impact that outlook.
Prospective borrowers made 4 percent fewer mortgage inquiries than the prior week in the U.S. Mortgage Market Index for the week ended Jan. 20 from Mortech Inc. and MortgageDaily.com. The decline in activity corresponded with the Martin Luther King Jr. holiday.
The index, which clocked in at 237 this week, was 13 percent higher than the same week in 2011.
Inquiries for jumbo loans, those in excess of $417,000, fell 5 percent over the past week — the most of any category. The decline defied an improvement in the jumbo-conforming spread to 64 basis points this week from 67 BPS in the prior report.
Refinances were off 4 percent for the week but 66 percent stronger than the week ended Jan. 19, 2011.
Total refinance share was 73 percent, about the same as the prior Mortgage Market Index report. This week’s share included a rate-term refinance share of 60 percent and a cashout share of 14 percent.
Inquiries for loans to finance home purchases were also off 4 percent from a week earlier, as were conventional inquiries and inquiries for loans insured by the Federal Housing Administration. FHA share slipped to 11.27 percent from 11.31 percent.
The conforming 30-year mortgage averaged 4.02 percent in the latest report, 3 BPS better than in the week ended Jan. 13.
Customers inquiring about 15-year mortgages were treated to a 69-basis-point discount over 30-year borrowers, the same as a week ago. The spread was 73 BPS in the same week last year.
The yield on the 10-year Treasury note — a benchmark for mortgage rates — averaged 1.96 percent this week, while the yield closed at 2.05 percent on Friday, based on an analysis of Treasury Department data. The trend points to home-loan rates that could be 9 BPS worse in next week’s report.
However, renewed concern over Greece’s ability to reach an agreement with its bondholders could put downward pressure on U.S. rates as investors move their money out of risky equities markets and into the U.S. Treasury market. A potential deal includes a loan modification with huge principal write downs by bondholders.
