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Mortgage Activity Jumps as Borrowers Rush to Refi

Mortgage News

As mortgage rates moved lower, new mortgage activity moved higher. But a jump in bond yields could mean higher mortgage rates and slower new business.

Mortgage activity took a leap this week, climbing 15 percent from last week and leaving the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily at 304 for the week ended May 3.

On an unadjusted basis, the index has not been this high since it was 321 in the week ended Oct. 7, 2011.

Compared to the revised index from the week ended May 4, 2012, activity has risen 18 percent.

The boost in business was supported by refinance transactions. Pricing inquiries for refinances jumped 19 percent from the week ended April 26.

More than 71.2 percent of the latest activity was refinance, up from a 68.4 percent refinance share the previous week. The share was a little fatter than the two-thirds share in the year-earlier period. Rate-term share made up 57.9 percent of this week’s share, and cashouts accounted for 13.3 percent.

Conventional activity rose 16 percent from the previous report.

Pricing inquiries for mortgages that will be insured by the Federal Housing Administration increased 8 percent from last week and 7 percent from a year earlier. FHA share slipped to 13.0 percent from 13.8 percent seven days prior.

Jumbo business was up 7 percent for the week and 12 percent higher than the same week last year. Jumbo share fell to 5.6 percent from 6.0 percent.

Jumbo loan prospects were quoted rates that averaged 33 basis points more than conforming rates, a basis point more than in the prior report.

Inquiries for purchase financing rose 4 percent from the previous week and were 10 percent higher than the same week in 2012.

The week’s weakest performers were adjustable-rate mortgages, which increased just 3 percent. ARM activity has plunged 44 percent from a year earlier. ARM share dipped to 4.5 percent from 4.9 percent and stands at less than half its level 12 months prior.

Thirty-year fixed-rate mortgages averaged 3.643 percent, off from 3.684 percent in the previous report. One year previous, the 30 year was 4.066 percent.

Borrowers who opted for a 15-year mortgages were quoted a rate that was 75 BPS better than the 30-year rate, about the same spread as the prior week. The spread was 77 BPS this week last year.

Mortgage rates are likely to be higher by the next time the Mortgage Market Index rolls around, according to a Mortgage Daily analysis of this week’s Treasury market activity.

At 1.78 percent, Friday’s closing yield on the 10-year Treasury note was 8 BPS higher than the average 10-year yield during the week encompassed by the latest Mortgage Market Index.

Bond yields climbed as the government reported strong monthly employment Friday.

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