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Business Slips Despite Rate Improvement

Mortgage News

Fewer mortgage pricing inquiries were made this week even though interest rates fell. But jumbo business was better, and refinances held steady.

Pricing inquiries pulled by loan originators eased 2 percent from last week, leaving the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended March 30 at 215. However, the index has improved 7 percent from the same week last year.

Following two consecutive weeks of improvement, purchase activity fell 5 percent from the week ended March 23. Purchase business was down 28 percent from a year earlier.

The next-worst performing category was Federal Housing Administration loans, which was off 4 percent for the week. Inquiries for conventional loans slipped just 1 percent.

Also lower was new adjustable-rate mortgage business, which eased 2 percent and was off by more than a half from the week ended April 1, 2011. ARM share was off slightly from a week earlier to 4.3 percent.

But refinance inquiries held their own, with no change from seven days prior. Refinances were up more than half from this week in 2011. Total refinance share was lifted to 62 percent from 61 percent and was just 42 percent a year ago. This week’s share reflected a rate-term share of 49 percent and a cashout share of 13 percent.

The best-performing category in the latest survey was jumbo business, which was up 4 percent. Jumbo share rose to 8.2 percent from last week’s 7.7 percent share despite a slight increase the premium for a jumbo mortgage to 59 basis points from 58 BPS.

Borrowers inquiring about a conforming, fixed-rate, 30-year mortgage were quoted an average rate of 4.207 percent, retreating from 4.275 percent in the previous report. A year ago, the 30 year was 5.005 percent.

Inquiries for 15-year mortgages were priced 76 BPS better than 30-year inquiries versus the 78-basis-point spread last week and the same week last year.

An analysis of Treasury market activity by Mortgage Daily suggests that mortgage rates could be about the same in next week’s report. The yield on the 10-year Treasury note averaged 2.22 percent during the week the index was determined, while the 10-year yield closed at 2.23 percent today.

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