With jumbo activity leading the way, new mortgage business was down this week. Also hurting weekly performance were adjustable-rate mortgages and refinances. A further retreat is possible based on interest rates that are likely to be higher in the next report.
The average loan originator pulled 7 percent fewer pricing inquiries than a week earlier in the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Nov. 1.
An even bigger decline was recorded compared to a year earlier, with business down 31 percent on a year-over-year basis. Figures from a year ago were revised to reflect statistics from the same data provider.
The biggest week-over-week drop hit jumbo pricing inquiries, which fell 13 percent from the week ended Oct. 25. Jumbo business was up, however, 27 percent from the same week in 2012.
Movement in the jumbo category reflected a narrower jumbo share, which fell to 7.4 percent from 7.9 percent — though jumbo share has fattened from 4.0 percent this week last year.
Jumbo mortgages became more expensive relative to their conforming counterparts, with the jumbo-conforming spread widening to 30 basis points from the previous week’s 29 BPS. Jumbo loans were priced 52 BPSÂ higher than conforming loans in the week ended Nov. 2, 2012.
Inquiries for ARMs fell back 10 percent from last week but have more than doubled from a year ago. ARM share slipped to 10.4 percent from 10.7 percent but has widened considerably from 3.5 percent in the year-earlier period.
A 7 percent decline for conventional activity was next. The conventional MMI was down more than a third from the same week in 2012.
Four percent fewer inquiries were pulled for purchase financing, though 41 percent more purchase inquiries were pulled than a year prior.
The best performance was delivered by the government category, with inquiries for loans insured by the Federal Housing Administration off less than 4 percent for the week. FHA business has fallen 36 percent on a year-over-year basis.
FHA inquiries accounted for 15.3 percent of weekly activity, more than the 14.8 percent share in the previous report but not as much as the 16.6 percent share one year prior.
Average fixed rates on 30-year mortgages slipped to 4.400 percent from 4.407 percent seven days earlier but have jumped from 3.642 percent 12 months earlier.
The rate discount for 15-year mortgages was slightly worse this week at 89 BPS compared to 90 BPS in the prior report. Still, 15-year pricing was much more competitive than the same week last year, when the spread was just 63 BPS.
Thirty-year fixed rates are likely to be around 8 BPS higher in the next Mortgage Market Index report based on Mortgage Daily’s analysis of Treasury market activity.
According to data provided by the Treasury Department, the yield on the 10-year Treasury note — which is closely tracked by fixed mortgage rates — averaged 2.57 percent during the week covered by the latest report, while the 10-year yield closed Friday at 2.65 percent.
