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FHA, Refis Drag Down New Mortgage Business

Mortgage News

Despite a drop in interest rates this week, new mortgage activity slowed. Leading the decline were government-insured loans and refinances.

A 3 percent drop from last week left the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended April 19 at 268. But the index, which is based on average pricing inquiries per LoanSifter user, was up 18 percent from the revised level a year ago.

The biggest drag on this week’s business was pricing inquiries for mortgages insured by the Federal Housing Administration, which fell 4 percent from the week ended April 12. FHA business was up 12 percent from the revised level the same week last year.

FHA share dipped to 14.4 percent from 14.5 percent in the previous report but stood below the revised 15.2 percent level for the week ended April 20, 2012.

The next-biggest drop was with refinances, with the Refinance MMI off more than 4 percent for the week. But refinance activity was up 23 percent from the revised figure a year prior.

Refinance share slipped to 68.6 percent from 69.1 percent and was a revised 65.7 percent in the year-earlier period. This week’s share reflected a 55.5 percent rate-term share and a 35.0 percent cashout share.

Conventional pricing inquiries were off by less than 4 percent from seven days prior but increased 16 percent from the revised number 12 months prior.

Inquiries for adjustable-rate mortgages slipped less than a percent from a week earlier and have tumbled a revised 45 percent from a year earlier. ARM share was 5.0 percent, up from the previous week’s 4.8 percent but way off the revised 10.6 percent ARM share this week last year.

Jumbo mortgages were the only category to show a week-over-week gain: 1 percent. Jumbo business has improved by 17 percent from the revised level a year ago. Jumbo share climbed to 6.3 percent of all activity from 6.0 percent in the last report but hasn’t changed from the revised share one year prior.

At 29 BPS more than conforming rates, jumbo mortgage pricing improved from the jumbo-conforming spread of 30 BPS in the previous report and a revised 45 BPS in the same week during 2012.

Fixed-rate, 30-year conforming loans averaged 3.701 percent, falling from 3.736 percent last week. A year ago, the 30 year averaged a revised 4.107 percent.

Fifteen year loans were discounted 74 BPS compared to 30-year mortgages, not quite as good as the 75-basis-point discount as of the prior week or the revised 76-basis-point discount one year prior.

Mortgage rates are unlikely to be much different in the next Mortgage Market Index report based on a Mortgage Daily analysis of Treasury market activity. At 1.73 percent as of today’s close based on Treasury Department data, the yield on the 10-year Treasury note was the same as the average during the week covered by the Mortgage Market Index.

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