With home-purchase financing and government mortgage inquiries leading the way, new mortgage activity increased this week. The rise came despite worsening rates as prospective borrowers apparently rushed to lock in interest rates before they rose even further. But Treasury market activity indicates that there might be some rate relief in the next report.
At 220, the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended March 23 was up 2 percent from last week and 10 percent better than the week ended March 25, 2011. The index reflects pricing inquiry activity by Mortech’s loan originator clients — which tends to increase during periods of rising rates as consumers lock in rates before they rise further.
The strength in this week’s performance came from inquiries for loans to finance home purchases, which were up 13 percent from the week ended March 16. But purchase activity was still down more than a quarter from the same week last year.
Also significantly improving this week were inquiries for mortgages insured by the Federal Housing Administration. FHA activity climbed 11 percent during the past seven days.
Conventional mortgage business inched up 1 percent from last week.
Refinances, however, declined 3 percent for the week, though the number of borrowers looking to refinance their existing mortgages were up by more than half from a year earlier.
Total refinance share was cut to 61 percent from last week’s 64 percent share. Refinance share was only 47 percent a year ago.
This week’s refinance share reflected a rate-term share of 48 percent and a cashout share of 13 percent.
The volume of consumers shopping for an adjustable-rate mortgage fell 5 percent over the prior week, while ARM activity sank by nearly half from this week last year. ARM share slipped to 4.3 percent from 4.7 percent and tumbled from 9.5 percent at the same time during 2011.
Jumbo mortgages put in the worst performance this week, with inquiries for jumbo loans down by 10 percent from last week as jumbo share declined to 17 percent from 19 percent. The deterioration came despite that the premium for a jumbo loan fell to 58 basis points from last week’s 60 BPS. The jumbo-conforming spread was 61 BPS a year previous.
Fixed-rate 30-year mortgages averaged 4.275 percent in the latest report, climbing from 4.140 percent seven days earlier but well below 4.919 percent a year earlier.
An analysis of Treasury market activity suggests that mortgage rates could be 9 BPS better in next week’s Mortgage Market Index report. During the seven-day period that index was tracked, the yield on the 10-year Treasury note averaged 2.34 percent, according to data reported by the Department of the Treasury. The 10-year Treasury yield closed Friday at just 2.25 percent.