ARM business sees biggest decline

July 30, 2018

By Mortgage Daily staff

As new mortgage business fell last week -- government-insured share sank to the most narrow level since last year, the jumbo-conforming spread thinned, and demand for adjustable-rate mortgages tumbled most.

In the seven days that ended on Aug. 3, the Mortgage Daily U.S. Mortgage Market Index -- an indicator of upcoming single-family loan originations -- receded 5 percent from the preceding week.

The index, which is determined based on average per-user rate-lock volume by clients of OpenClose, has plunged 28 percent compared to the same week in 2017. No seasonal adjustment are made to the index.

A 12 percent tumble from the week ended July 27 was recorded for the ARM MMI, the biggest drop of any program. ARM activity has increased, however, 41 percent from the same week a year ago. ARMs accounted for 17.4 percent of all activity, less than 18.8 percent in the last report and just 9.0 percent in the year-earlier report.

Jumbo rate locks slowed 11 percent and were down 7 percent from the week ended Aug. 4, 2017. Jumbo share thinned to 8.4 percent from 9.0 percent but was wider than 6.6 percent twelve months previous. Interest rates on jumbo loans were 15 basis points more than conforming rates reported Thursday by Freddie Mac, less than the 18-basis-point spread in the last report but more than 5 BPS as of the same report from last year.

Compared to the last report, government rate locks were down 7 percent, while they have plunged by a third from a year earlier. Government share was 35.1 percent and was
comprised of a 11.6 percent VA share and a 23.6 percent FHA share -- the thinnest FHA share since it was 18.9 percent in the week ended Nov. 3, 2017.

A more than 5 percent decrease was recorded for rate locks of loans to finance a home purchase. Purchase-money activity sank 28 percent from the same-seven days in 2017.

A nearly 5 percent decline hit refinance rate locks, while -- similar to purchases -- refinance business fell 27 from one year prior. Refinance share inched up to 31.4 percent from 31.3 percent a week earlier and a year earlier. Most recently, refinance share was made up of a 8.3 percent rate-term share and a 23.0 percent cashout share.

With a 4 percent dip from the previous week, conventional rate locks had the best week-over-week performance. Conventional business declined 24 percent from the same week last year.

next story

back to current headlines