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Improvement in Rates Fails to Lift New Mortgage Business

Mortgage News

Mortgage rates improved this week and could be even better in next week’s report. But that wasn’t enough to stimulate new mortgage business. The biggest drag on this week’s activity were jumbo mortgages and government-insured loans.

At 265 for the week ended April 26, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily was little changed from 268 a week earlier.

But the index, which is based on average pricing inquiries per LoanSifter user, was up 16 percent compared to the same week last year. The year-earlier numbers in this report were revised to reflect a change in data providers on April 12.

Jumbo pricing inquiries dropped 4.7 percent from the week ended April 19, more than any other category. Still, jumbo business was 12 percent better than the same week in 2012. Jumbo share slipped to 6.0 percent from 6.3 percent and was 6.2 percent a year earlier.

Jumbo activity slowed as the spread between conforming loans and jumbo mortgages widened to 32 basis points from the previous week’s 29 BPS. But jumbo loans remain priced much better than in the week ended April 27, when the conforming-jumbo spread was 45 BPS.

Pricing inquiries for loans insured by the Federal Housing Administration took the next-biggest hit, declining 4.6 percent from the prior report. But FHA business was 6 percent better than the same week in 2012. FHA share, meanwhile, fell to 13.8 percent from 14.4 percent in the prior week and 15.1 percent in the same week during the prior year.

Adjustable-rate mortgages saw 1.4 percent fewer pricing inquiries than in the previous week and 45 percent less activity than in the same week in the previous year. ARM share dipped to 4.9 percent from 5.0 percent a week earlier and 10.4 percent a year earlier.

While refinance business was off 1.2 percent from last week, it was up 22 percent from a year ago. Refinance share was 68.4 percent, not much different than 68.6 percent in the previous report. But refinance share inched up from 65.3 percent in the same week during 2012. The most recent share reflected a 55.2 percent rate-term share and a 13.1 percent cashout share.

A less than 1 percent decline from last week was recorded for purchase financing inquiries, though a 6 percent year-over-year gain was made.

The only category to increase this week — albeit less than 1 percent — was the conventional category. Conventional business was up 16 percent from 12 months prior.

Thirty-year fixed-rate mortgages averaged 3.684 percent, lower than last week’s 3.701 percent. A year ago, the 30 year averaged 4.088 percent.

Customers who opted for a 15-year mortgage were quoted a rate that was discounted 75 BPS from 30-year rates, minimally better than the 74-basis-point spread in the previous report. The spread between short- and long-term mortgages was 77 BPS a year ago.

The 30-year mortgage could be a little cheaper in next week’s report based on a Mortgage Daily analysis of Treasury market activity.

Data from the Department of the Treasury indicate that the daily yield on the 10-year Treasury note averaged 1.73 percent this week, while the 10-year yield closed at 1.70 percent Friday.

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