Rising mortgage rates continued to push down new activity. The weakness came despite strength in purchase financing, government-insured lending and cashout refinance business. Inquiries for jumbo mortgages, refinances and adjustable-rate mortgages took the biggest hit.
A 7 percent decline from last week in the average number of loan pricing inquiries pulled by mortgage loan originators left the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Aug. 10 at 212. Inquiries were down 55 percent from the same week last year when the index reached an all-time high of 470.
Activity has fallen two consecutive weeks.
Jumbo again came in as the worst-performing category this week with a 14 percent decline from seven days earlier. The deterioration was surprising given that the premium for a jumbo loan improved to 72 basis points over conforming pricing from the 78-basis-point spread in the report for the week ended Aug. 3. A year ago, jumbo mortgages were only priced at a 53-basis-point premium over conforming loans.
Inquiries for refinances were down 10 percent from a week earlier and 53 percent lower than the week ended Aug. 12, 2011.
The share of this week’s activity that was refinance was 72.3 percent, narrowing from 74.7 percent in the prior report but a bigger share than this week last year, when 69 percent of activity was for refinance. Rate-term refinance share was 58.0 percent, and cashout share was 14.3 percent — the highest cashout share since the 14.8 percent level in the week ended Dec. 2, 2011.
Nine percent fewer borrowers inquired about an ARM this week than last week, while ARM activity was down 80 percent from the same week in 2011. ARM share diminished to 2.77 percent from 2.84 percent last week and was also down from 6.33 percent a year ago.
Inquiries for conventional mortgages fell 8 percent for the week and 56 percent from the same week last year.
But government-insured business was higher, with inquiries for loans insured by the Federal Housing Administration rising 2 percent over the past seven days and up for the second consecutive week. FHA activity was down 42 percent, however, from a year earlier. FHA share inched up to 11.5 percent from 10.5 percent last week and was also up from 9.0 percent 52 weeks ago.
Also up 2 percent from last week were inquiries for purchase financing. But purchase activity was down 59 percent from one year prior.
The 30-year fixed-rate mortgages averaged 3.703 percent in the latest report, up for the second week in a row from 3.627 percent last week. The 30 year was 4.27 percent in the year-earlier period.
Fifteen-year mortgages were priced 66 BPS better than 30-year loans, improving from the 62-basis-point spread in the same week during 2011. Fifteen-year borrowers were quoted rates that were 75 BPS below rates for 30-year borrowers a year earlier.
Mortgage rates aren’t likely to be any different in next week’s report based on Treasury market activity. During the week covered by the Mortgage Market Index, the 10-year Treasury yield was 1.64 percent, while the 10-year yield closed Friday at 1.65 percent, according to data from the Department of the Treasury.
