Consumers abandoned the mortgage market for the Labor Day holiday, with jumbo borrowers leading the way despite a decline in the premium for a jumbo loan. The share of activity represented by adjustable-rate mortgages continued to diminish and has plummeted nearly three quarters over the past year.
At 172, the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Sept. 7 was 18 percent lower than a week earlier. Compared to the same week in 2011, pricing inquiries have fallen by nearly a third.
The biggest decline was recorded with jumbo mortgages, with inquiries for jumbo loans tumbling 21 percent from the week ended Aug. 31. Jumbo share fell to 8.4 percent from 8.8 percent.
Jumbo activity was lower despite that the premium for a jumbo mortgage fell to 66 basis points over a conforming mortgage from 71 BPS in the previous report. But the jumbo-conforming spread has widened from 62 BPS in the week ended Sept. 9, 2011.
Inquiries for loans insured by the Federal Housing Administration were down 18 percent for the week and have fallen 21 percent from the same week last year. FHAÂ share slipped to 11.0 percent from 11.1 percent a week ago but strengthened from 9.3 percent a year ago.
Also declining 18 percent for the week were inquiries for refinances. Over the past 12 months, refinance activity has fallen by more than a quarter.
Refinance share was little changed from last week at 72.2 percent. But the proportion of business that is refinance has widened from 67.1 percent in the same week during 2011. The latest refinance share reflected a 57.3 percent rate-term share and a 14.9 percent cashout share.
Conventional loan inquiries fell nearly 18 percent from last week and were down a third from one year earlier.
ARM inquiries were off by 17 percent for the week and have plunged 72 percent from this week in 2011. ARM share was hardly changed for the week at 2.8 percent but has tumbled from 6.7 percent in the year-earlier report.
The least-worst performance was delivered by the purchase financing category, which was down less than 17 percent from the previous report. But purchase activity remains 43 percent lower than a year ago.
Mortgage rates eased this week, with the fixed-rate 30-year mortgage averaging 3.648 percent versus 3.684 percent in the prior report. A year ago, the 30 year was 4.237 percent.
Borrowers who opted for a shorter term 15-year mortgage were quoted a rate that was 63 BPS better than 30-year loans, not as good as the 65-basis-point discount in the last report. The spread between 15- and 30-year loans was 81 BPS a year prior.
Mortgage rates are likely to be around 6 BPS higher in next week’s Mortgage Market Index report based on Treasury market activity. The yield on the 10-year Treasury note averaged 1.61 percent during the week covered by the index, while it closed at 1.67 percent on Friday, according to data from the Department of the Treasury.
