Mortgage Business Declines, Record Rates Ready to Rise

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MORTGAGE EXPERT
6 · 22 · 12

A new low for mortgage rates wasn’t enough to stimulate new loan activity. But jumbo business managed a gain despite continued deterioration in the premium for jumbo financing. Record rates are set to rise in the next report.

Mortgage loan originators were less busy this past week, pulling 3 percent fewer pricing inquiries than they did last week. The decline left the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended June 22 at 223 — the same as it was in the week ended June 24, 2011.

Overall activity was in line with refinance inquiries, which fell 3 percent over the past seven days. But refinance volume was more than a third better than the same week last year.

Refinances accounted for 71 percent of this week’s activity, slipping from 72 percent in the week ended June 15. A year earlier, refinance share was just 53 percent. The most-recent share reflected a 58 percent rate-term share and a 13 percent cashout share.

Also down 3 percent for the week were pricing inquiries for conventional mortgages. Conventional business was barely changed from this week in 2011.

Inquiries for mortgages insured by the Federal Housing Administration accounted for 13.2 percent of weekly volume, inching up from 13.1 percent a week ago and more than 12.0 percent a year ago. FHA activity nudged down 2 percent from last week but was up 9 percent from this week last year.

Purchase financing inquiries were off 2 percent for the week and down 39 percent from the year-earlier period.

The share of overall inquiries that were for adjustable-rate mortgages was mostly unchanged at 3.3 percent, though ARM share was way off the 10.0 percent registered one year prior. ARM business drifted down 1 percent from the previous week but tumbled by two-thirds from the same week in the previous year.

The only category to show a gain this week was jumbo, which rose 1 percent from last week’s report. Jumbo share increased to 8.5 percent from 8.2 percent. The rise in the jumbo metrics came even though the premium for jumbo financing climbed to 73 basis points from 70 BPS. The jumbo-conforming spread was only 43 BPS a year prior.

This week’s 30-year fixed-rate mortgage averaged 3.782 percent — the lowest on record since the Mortgage Market Index was launched in 2009. The 30 year was 3.838 percent a week earlier and 4.666 percent a year earlier.

Rates will likely climb around 7 BPS by the time the next Mortgage Market Index report rolls around based on Treasury market activity. The yield on the 10-year Treasury note, which is tracked by mortgage rates, averaged 1.62 percent during the seven days covered by this report, while the 10-year yield closed at 1.69 percent today, according to data released by the Department of the Treasury.

Mortgage Expert

Mortgage Daily Staff

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