Refis, Conventional Activity Lead Weekly Mortgage Market Index Lower

Refis, Conventional Activity Lead Weekly Mortgage Market Index Lower

DALLAS — (Dec. 17, 2012) With Christmas fast approaching, loan originators had rate locks on fewer loans last week. Refinance activity had the biggest effect on weekly activity, though conventional locks also significantly impacted the index.

The U.S. Mortgage Market Index from Mortgage Daily for the week ended Dec. 14 was 192.

An improvement to the data source has been made to the Mortgage Market Index. On Dec. 14, 2012, Optimal Blue LLC became the provider of the numbers for the index. Optimal Blue is a dominant product and pricing engine based in Plano, Texas. The new data are based on rate-locking activity by Optimal Blue clients for the seven days ended each Thursday at 11:59 p.m.

Optimal Blue’s typical loan originator client works for an independent mortgage banker that table funds originations then sell the loans to aggregators like JPMorgan Chase & Co. or Wells Fargo & Co. or directly to the housing finance agencies.

A week earlier, the index — using Optimal Blue’s historical data — was 256. The week-earlier Mortgage Market Index was originally reported at 201 using data from the previous provider.

A year earlier, the index was reported at 220.

Refinances took the biggest hit in the most recent report, tumbling 28 percent from the previous week based on Optimal Blue data. The refinance share was 54 percent, down from 56 percent seven days earlier. The latest week’s share included a 43 percent rate-term share and an 11 percent cashout share.

The previous week’ refinance share of 56 percent, using the Optimal Blue data, was far lower than the 77 percent share during the same week using the previous data source. Optimal Blue attributed this to its client base, which has a greater focus on purchase production.

Another possible factor is that the previous data source was based on pricing inquiries, and many pricing inquiries might be pulled on a refinance transaction before a rate lock is registered.

Conventional pricing locks had the next-biggest impact on overall business, declining 26 percent from the week ended Dec. 7.

Purchase transactions were down 22 percent for the week, while a 21 percent decline was recorded for rate locks on mortgages insured by the Federal Housing Administration. FHA share inched up to 18 percent from 17 percent in the prior week.

Adjustable-rate mortgage locks were off just 10 percent. ARM share, meanwhile, increased to 3.6 percent from 3.0 percent.

The latest week’s best-performing category was jumbo business, with jumbo locks rising 3 percent from the prior week. Jumbo share climbed to 8.8 percent from 6.4 percent. Jumbo borrowers, those whose loan amounts exceed $417,000, paid 38 basis points more on their rates than their conforming counterparts, better than then 40-basis-point premium being charged in the prior report.

Conforming 30-year mortgages averaged 3.651 percent, a little higher than 3.613 percent a week earlier. The conforming rate was reported at 4.070 percent in the Mortgage Market Index for the week ended Dec. 16, 2011.

Borrowers on 15-year mortgages locked rates that were an average of 71 BPS better than on 30-year loans. The spread improved from 67 BPS last week, making the shorter term more attractive.