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Conventional Refi Business Surges

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New mortgage business jumped this past week and has improved for three consecutive weeks now. Conventional refinances fueled the surge in new business, though jumbo activity saw the biggest increase.

The U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Jan. 18 came in at 218. Activity increased 32 percent from the prior week and has soared 54 percent from the revised level the same week during the prior year.

Activity, which is based rate locks by loan originator clients of Optimal Blue, has risen each week since Dec. 28, 2012, when the index stood at just 88.

Leading volume higher were jumbo rate locks, which soared 45 percent from the week ended Jan. 11. Jumbo activity was 57 percent higher than the revised level a year earlier.

During the latest week, jumbo activity accounted for 7.9 percent of total activity. Jumbo share widened from 7.1 percent seven days prior and 7.7 percent during the same week in 2012.

Refinances jumped 39 percent from the prior week and were up 43 percent from the week ended Jan. 20, 2012. Refinance share, meanwhile, broadened to 56 percent from 52 percent but fell from 60 percent in the year-earlier period. The most-recent share reflected a rate-term share of 45 percent and a cashout share of 11 percent.

Conventional business increased 36 percent and was up 57 percent from a year prior.

The adjustable-rate mortgage category followed, rising 29 percent for the week. But ARM business was off 15 percent from the same week in 2012. ARM share slipped to 3.3 percent from 3.4 percent and has plummeted from the revised 14.6 percent a year earlier.

After that was purchase financing, with rate locks improving by 23 percent from the previous report. Purchase business has expanded by 70 percent when compared to the same week in 2011.

The weakest performance came from the Federal Housing Administration category, with FHA activity up 13 percent. But FHA rate locks were up 41 percent on a year-over-year basis. FHA share fell to 16.6 percent from 19.3 percent the prior week and 18.2 percent in the same week the prior year.

It is unlikely mortgage rates will be much different in next week’s report based on an analysis of Treasury market activity.

The 10-year Treasury note yield averaged 1.87 percent during the seven days covered in the latest report, according to data provided by the Department of the Treasury. The 10-year yield closed at 1.87 percent Friday.

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