New loan activity dropped this week, with refinance business leading the decline. As mortgage rates continue to climb, more loan prospects are electing to go with an adjustable-rate mortgage.
At 273, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended June 21 was down 13 percent from a week earlier. But the index was virtually unchanged from a year earlier.
The primary driver for diminished activity was a 17 percent drop from the week ended June 14 in pricing inquiries for refinance transactions. Refinance inquiries have fallen 12 percent from the same week in 2012.
A little more than 60.1 percent of this week’s new business was for refinance transaction, off from a 63.3 percent seven days ago. Refinance share was 68.8 percent a year ago. This week’s share reflected a rate-term share of 44.1 percent and a cashout share of 16.0 percent.
Conventional business took a 13 percent hit for the week but was off less than a percent from the week ended June 22, 2012.
Next were pricing inquiries for loans insured by the Federal Housing Administration, which were down 6 percent and have retreated 12 percent from a year prior.
FHA share was 15.7 percent, wider than 14.6 percent last week but a smaller share than 17.8 percent this week last year.
Even inquiries for purchase financing, which have recently held up relatively well, declined 5 percent for the week. But purchase business has increased 28 percent from 12 months prior.
Five percent fewer people were shopping for an ARM this week versus the previous report. ARM activity has plummeted by more than a quarter from a year prior. ARM share increased to 6.5 percent from 6.0 percent but fell short of the 8.9 percent share a year earlier.
A 4 percent decline was recorded for jumbo business. But pricing inquiries for jumbo mortgages were up 11 percent from the same week in 2012. Jumbo share expanded to 5.5 percent from 5.0 percent in the previous report and 4.9 percent in the same report during the previous year.
Jumbo pricing was more competitive this week, with the spread between conforming and jumbo rates slipping to 28 basis points from 30 BPS. The jumbo-conforming spread has seen a huge improvement from a year ago, when it stood at 49 BPS.
An 8-basis-point drop from the prior week left the 30-year, fixed-rate mortgage averaging 4.303 percent in this week’s report. The 30 year was just 3.879 percent at the same point last year.
Borrowers who opted for a 15-year mortgage were treated to an interest rate that was 83 BPS better than 30-year rates, improving from an 81-basis-point spread in the previous report and a 65-basis-point spread in the year-earlier period.
Thirty-year mortgage rates are poised to worsen by nearly 20 BPS by the next Mortgage Market Index based on a Mortgage Daily analysis of this week’s Treasury market activity.
Data from the Department of the Treasury indicate that the 10-year Treasury yield averaged 2.33 percent this week. The 10-year yield closed at 2.52 percent on Friday.