Following three consecutive weeks of decline, loan originators managed a healthy post-holiday bump in new business. While new refinance business was strong, an even bigger jump was recorded for jumbo and adjustable-rate mortgages.
The average number of rate locks completed shot up 70 percent from last week, leaving the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Jan. 4 at 149. The index had been lower each week since Dec. 7, 2012, when it stood at 201
The index was 78 percent higher than the revised index for the same week in 2011.
Rate locks for ARMs leapt 102 percent from the week ended Dec. 28, 2012, but were off nearly a fifth from the same week last year. ARM share inched up to 3.0 percent from 2.5 percent but has fallen significantly from 6.5 percent a year earlier.
Jumbo volume expanded 92 percent from last week and was 61 percent better than the week ended Jan. 6, 2012. Jumbo share widened to 6.5 percent from the previous week’s 5.8 percent but was narrower than 7.2 percent during the same week a year prior.
Jumbo borrowers were locked in at a rate that was an average of 31 basis points worse than conforming mortgage rates, the same as last week. But the jumbo-conforming spread has fallen from 57 BPS in the year-earlier period.
A 78 percent week-over-week gain was noted for refinance rate locks, while refinance activity was two thirds higher than a year ago.
Refinance share totaled 53 percent this week, gaining from 51 percent in the prior report but off from a revised 57 percent in the same week during the prior year. The most recent share reflected a rate-term share of 42.3 percent and a cashout share of 10.8 percent.
Conventional business was up 71 percent for the week and has risen 78 percent over the past year.
Rate locks for mortgages insured by the Federal Housing Administration increased 67 percent from the previous week and were up 78 percent from the same week in the previous year. FHA share fell to 17.8 percent from 18.1 percent but was slightly higher than the same week last year.
With a 63 percent increase over the previous week, rate locks for purchase financing were the worst performers, Purchase business, however, has nearly doubled over the past year.
Thirty-year fixed mortgage rates were little changed, inching up to 3.672 percent from 3.666 percent in the prior Mortgage Market Index report. The 30 year was a revised 4.209 percent during the same week last year.
Average 15-year rates were discounted 74 BPS over 30-year mortgages, improving from the 72-basis-point discount in the prior report and the 67-basis-point spread in the year-earlier report.
Mortgage rates are likely to be around 9 BPS worse in the next Mortgage Market Index report based on a Mortgage Daily analysis of Treasury market activity. The 10-year yield averaged 1.84 percent during the week covered by the latest report, while it closed at 1.93 percent on Friday, according to the Department of the Treasury.