Thanks to record-low mortgage rates and a healthy boost in demand for refinances, mortgage activity climbed this week. Interest rates are poised to drop another 5 basis points by the next report. But the low rates weren’t enough to increase demand for home purchase financing.
A 9 percent gain from last week left the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Friday at 224. Activity slowed, however, from the same week in 2011, when the index was 234.
Leading the improvement were pricing inquiries for refinances, which climbed 15 percent over the past week. Compared to a year ago, refinances were up 29 percent.
Refinance share moved up to 67 percent from the previous week’s 63 percent. During the week ended May 13, 2011, the share was lower at half. This week’s share included a 54 percent rate-term share and a 13 percent cashout share.
Gaining 10 percent over last week’s volume were conventional loan inquiries.
A 7 percent increase was recorded for jumbo mortgages, which accounted for 9.2 percent of total business. Jumbo loans were priced at a 57-basis-point premium over conforming loans, worse than the 53-basis-point jumbo-conforming spread in the prior report.
Inquiries for adjustable-rate mortgages increased 3 percent for the week but were down by 55 percent from the same week last year. ARM share slipped to 4.6 percent from last week’s 4.8 percent.
FHA-insured activity edged up 2 percent from the week ended May 4 but has fallen by 29 percent from a year earlier. FHA share declined to 10.4 percent from 11.1 percent and was down even more from 13.9 percent at this time last year.
The only category to see a decline this week was purchase financing. Inquiries for purchase mortgages dipped 2 percent from last week and were down 37 percent from this week last year.
The 30-year fixed-rate mortgage averaged 3.949 percent, improving from 4.005 percent in the previous report and 4.784 percent during the same week in the previous year. It was the lowest level for the 30 year on record since the Mortgage Market Index was launched in 2009.
Inquiries for 15-year mortgages were priced 79 BPS better than 30-year loans, improving from the 78-basis-point spread last week. A year ago, 15-year borrowers were treated to an 80-basis-point discount.
The mortgage market is poised for a 5-basis-point improvement in rates by the next Mortgage Market Index report. The yield on the 10-year Treasury note averaged 1.89 percent during the period covered by the report, while the 10-year yield closed at 1.84 percent today, according to Treasury Department data.
