Interest rates on residential loans are poised to make a leap higher, prompting prospective borrowers and their loan originators to rush into adjustable-rate mortgages.
At 137, the U.S. Mortgage Market Index from OpenClose and Mortgage Daily for the week ended Dec. 4 was 28 percent higher than in the previous week’s report.
The index, which is a measure of average per-user rate locks submitted by clients of OpenClose, has fallen by more than a fifth, however, from the same week last year.
Numbers for the year-earlier period have been revised to reflect statistics from the same data provider. No adjustments are made to the index for seasonal factors.
Rate locks for ARMs skyrocketed 63 percent from the week ended Nov. 27, though ARM activity has retreated 14 percent from this week last year. ARM share widened to 11.9 percent from 9.3 percent in the last report and 11.0 percent in the year-earlier report.
Up next were rate locks for refinances, which increased 36 percent versus the week that included the Thanksgiving Day holiday. Refinance business was 26 percent stronger than in the week ended Dec. 5, 2014.
Refinances accounted for 72.8 percent of the most-recent week’s activity. Refinance share widened from 68.2 percent in the last report and 57.9 percent 12 months prior. This week’s refinance share consisted of a 46.5 percent rate-term share and a 26.3 percent cashout share.
Rate locks for mortgages insured by the Federal Housing Administration were up exactly a third on a week-over-week basis and just over a third stronger on a year-over-year basis. FHA share inched up to 23.9 percent from 22.9 percent and has fattened considerably compared to the 14.3 percent as of this week in 2014.
Conventional activity rose by 26 percent but has declined 29 percent over the past 12 months.
Purchase financing business increased 22 percent from the previous week but has fallen 15 percent from the year-prior week.
The Jumbo Mortgage Market Index was 10, up eight percent for the week. But jumbo activity has subsided 40 percent from a year ago. Jumbo share fell to 7.6 percent from 8.9 percent a week earlier and 10.1 percent a year earlier.
Jumbo rates were 21 basis points lower than conforming rates, thinning from 22 BPS in the last report. The jumbo-conforming spread swung from a positive six BPS in the year-prior report.
Conforming 30-year fixed rates averaged 3.93 percent, off two BPS from the last report and 35 BPS better than 12 months ago.
The spread between 15- and 30-year mortgages was unchanged from the previous week at 77 BPS.
Fifteen-year rates were 88 BPS less than 30-year rates as of this week last year.
Fixed rates are likely to be around six BPS higher in the next Mortgage Market Index report based on a Mortgage Daily analysis of Treasury market activity.
