Inquiries for residential refinances leapt from last week as consumers were motivated to take advantage of the lowest mortgage rates on record. The surge was even stronger for jumbo loans.
Loan originators pulled an average of 11 percent more inquiries this week than they did last week, leaving the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Sept. 28 at 250.
The index, however, has fallen 20 percent from the same week last year.
Jumbo activity led all categories, rising 17 percent from the week ended Sept. 21. Jumbo share inched up to 8.9 percent from last week’s 8.5 percent.
Jumbo business strengthened despite that the premium for jumbo loans jumped to 73 basis points from 69 BPS last week. The jumbo-conforming spread was 70 BPS in the week ended Sept. 30, 2011.
Refinances rose 15 percent for the week, though refinance activity is down by 12 percent from a year ago. Refinance share widened to 77 percent from 75 percent and was 70 percent during the same week last year. This week’s rate-term share was 64 percent, and cashout share was 13 percent.
Inquiries for conventional loans jumped 12 percent from last week and were 21 percent lower than 12 months prior.
The week-over-week gain for mortgages insured by the Federal Housing Administration was 7 percent. FHAÂ business was down 12 percent from the same week in 2011. FHA share narrowed to 9.9 percent from 10.3 percent in the prior report. FHAÂ share was 9.0 percent this week last year.
Even adjustable-rate mortgage business was better, rising 5 percent from last week. But ARM activity stands 62 percent below this week in 2011. ARMÂ share slipped to 2.6 percent from 2.8 percent a week earlier and was 5.5 percent a year earlier.
Inquiries for purchase financing inched up 2 percent — the smallest week-over-week gain of any category. Purchase inquiries were 38 percent lower than a year ago.
Prospective borrowers were quoted an average rate of 3.411 percent on 30-year fixed-rate conforming mortgages, falling from 3.580 percent in the prior report to the lowest level ever recorded since the Mortgage Market Index was launched in 2009. The 30 year averaged 4.141 percent in the year-earlier report.
Rates reacted this week to the Federal Reserve’s recently announced plan to buy $40 billion in agency mortgage-backed securities each month.
The discount on 15-year mortgages diminished to 59 BPS from 64 BPS last week and 68 BPSÂ a year ago.
Mortgage rates have the potential to drop another 5 BPS by the time the next Mortgage Market Index report is released based on Treasury market activity. The yield on the 10-year Treasury note averaged 1.70 during the week covered by the report, while it closed at 1.65 percent Friday, according to data from the Department of the Treasury.
