Weekly Mortgage Market Index Lower Despite Uptick in FHA, Purchase Activity

Weekly Mortgage Market Index Lower Despite Uptick in FHA, Purchase Activity

DALLAS — (Oct. 29, 2012) Led by a decline in new jumbo business, overall mortgage activity slumped last week. But inquiries for purchase financing, government-insured loans and adjustable-rate mortgages strengthened.

At 223, the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Oct. 26 slipped 1 percent from the prior week. The index was down 13 percent from the same week in 2011.

The week’s biggest loser was the jumbo category, with jumbo pricing inquiries falling 6 percent from the week ended Oct. 19. Jumbo share was 7.8 percent, lower than the previous week’s 8.2 percent.

The decline in jumbo business came despite that the premium for a jumbo loan was trimmed to 67 basis points from the prior week’s jumbo-conforming spread of 68 BPS. The spread was just 60 BPS a year earlier.

Refinances saw the next-biggest decline, falling 3 percent from the prior report but 2 percent better than the week ended Oct. 28, 2011.

Three-quarters of the latest week’s activity was refinance, off slightly from 76 percent in the previous report. Refinance share was just 64 percent a year previous. The most-recent share consisted of a 60 percent rate-term share and a 14 percent cashout share.

Conventional lending was the only other category to see a decline, falling 2 percent for the week and down 12 percent over the prior 12 months.

Inquiries for mortgages to finance home purchases climbed 3 percent, though purchase activity has tumbled 39 percent from the same week last year.

Also up 3 percent from seven days earlier was adjustable-rate business. ARM activity stands at 63 percent below a year earlier. ARM share edged up to 2.5 percent from 2.4 percent but was less than half the 5.9 percent ARM share in the year-earlier period.

The best performance was put in by loans insured by the Federal Housing Administration, with FHA inquiries up a little more than 3 percent. But FHA business was off 18 percent from a year prior.

FHA share rose to 10.3 percent from the prior week’s 9.9 percent. During the same week last year, FHA share was 11 percent.

Behind last week’s slowdown were rising mortgage rates. Fixed-rate, 30-year, conforming mortgages averaged 3.572 percent, higher than 3.500 percent in the previous report. The 30 year was 4.345 percent a year prior.

The spread between 15- and 30-year mortgages was 70 BPS, making 15-year loans more attractive than a week earlier and a year earlier, when the spread was 68 BPS.