Jumbo Leads Drop in Mortgage Business as Rates Up

In the week that ended on March 11, the U.S. Mortgage Market Index from OpenClose and Mortgage Daily was determined to be 153.

The MMI, a reflection of average per-user rate locks submitted by OpenClose clients, was down 11 percent compared to the previous week.

Activity covered in the index includes rate locks from the previous Friday through midnight Thursday. The index was benchmarked at 197 in the week ended Dec. 16, 2009.

Business
was down 12 percent compared to the same week in 2015. Year-earlier numbers have been revised to reflect figures from the same provider of data.

Leading down the MMI were rate locks for jumbo mortgages, which sank by a third from the week ended March 4. Jumbo business has slowed 56 percent versus this week last year — the worst year-over-year decline. Jumbo share tumbled to 5.0 percent from 6.6 percent a week earlier and 9.8 percent a year earlier.

Interest rates on jumbo loans were about the same as on conforming mortgages. Jumbo rates had been eight basis points lower than conforming rates in the last report and were 10 BPS more in the year-previous report.

A 19 percent week-over-week decline was recorded for refinance business, though the category was 31 percent stronger than in the week ended March 13, 2015. Refinance share slid to 68.1 percent from 74.7 percent but was still wider than 45.7 percent one year prior. The most-recent share consisted of a 42.6 percent rate-term share and a 25.5 percent cashout share.

Up next were rate locks for conventional mortgages, which declined 12 percent from the last report and were off 22 percent on a year-over-year basis.

Rate locks for loans insured by the Federal Housing Administration slipped 6 percent but were still 41 percent better than one year ago. FHA share widened to 25.2 percent from 23.8 percent a week prior and 15.6 percent a year prior.

A 5 percent decline left the Purchase MMI at 71 — down nearly a quarter from 52 weeks earlier.

Unlike all other categories, rate locks for adjustable-rate mortgages increased from the previous report — by 11 percent. As fixed rates rise, prospective borrowers with new loans in process often rush in to lock lower ARM rates. ARM business, however, fell 46 percent from a year ago.

ARM share widened to 8.2 percent from 6.6 percent one week prior but was much more narrow than 13.4 percent one year prior.

Overall business slowed this past week as 30-year fixed rates ascended four BPS from the last report to 3.68 percent. But the 30 year has plummeted 50 BPS on a year-over-year basis.

Rates on 15-year mortgages were 72 BPS better than 30-year rates. The spread widened from 70 BPS a week earlier but thinned from 85 BPS a year earlier.