Elevated Interest Rates Fail to Slow Mortgage Activity

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6 · 14 · 13

Mortgage rates have increased for six consecutive weeks, but that wasn’t enough to slow down new mortgage activity. Next week’s interest rates are likely to be lower.

The average number of pricing inquiries pulled per loan originator inched up less than 1 percent from last week, leaving the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended June 14 at 313.

But compared to the same week last year, the index was higher, with the year-over-year increase working out to 11 percent.

Helping to prop up activity were inquiries for adjustable-rate mortgages, which gained 6 percent over the week ended June 7 but were down 13 percent the same week in 2012. ARM share inched up to 6.0 percent from 5.7 percent in the last report and 7.7 percent a year earlier.

Jumbo activity was up 3 percent for the week and 16 percent better than the week ended June 15, 2012. Jumbo share rose to 5.0 percent from 4.8 percent and was 4.7 percent in the same week last year.

Jumbo mortgages were priced at a 30-basis-point premium over conforming loans, the same as last week. But the jumbo-conforming spread has narrowed from 49 BPS a year prior.

Conventional business was up 1 percent and has risen 13 percent over the past year.

Pricing inquiries for loans insured by the Federal Housing Administration were up less than 1 percent from last week and 16 percent slower than 12 months prior. FHA share crept up to 14.6 percent from 14.5 percent but has tumbled from 19.3 percent this week last year.

The refinance MMI was barely changed over the past seven days and over the past 12 months. Refinance share was 63.3 percent, the same as in the previous report and lower than 69.9 percent in the year-earlier report. This week’s share reflected a 46.5 percent rate-term share and a 16.9 percent cashout share.

The worst performer in the latest report was the purchase financing category, which slowed less than a percent compared to the previous week but has climbed by more than a third from a year ago.

Conforming, 30-year fixed rates averaged 4.222 percent this week, increasing from 4.180 percent in the last report. The 30 year was 3.893 percent one year prior.

Rates on 30-year loans have worsened each week since May 3, when the 30 year averaged 3.643 percent.

There was no change in the spread between 15- and 30-year mortgages at 81 BPS. But the benefit of a shorter-term loan has improved considerably from the same week in 2012, when the spread was 70 BPS.

Mortgage rates are likely to be around 6 BPS lower in the next Mortgage Market Index report based on an analysis of this week’s Treasury market activity.

The yield on the 10-year Treasury note averaged 2.20 percent this week, according to data from the Department of the Treasury. The 10-year yield fell to 2.14 percent Friday.

Mortgage Expert

Mortgage Daily Staff



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