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Jumbo Business Better

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With the premium for a jumbo loan having fallen by more than half from a year ago, new jumbo business was up even as conforming activity was flat. The best year-over-year performance this week was delivered by purchase transactions, though adjustable-rate mortgages were close behind.

The U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended July 19 was 214, off less than a percent from last week.

The index, which reflects the average number of pricing inquiries per LoanSifter user, was down a fifth from the same week in 2012.

Year-earlier data in the report have been revised to reflect numbers from the same data provider, which changed in April.

Although the main index was minimally down, pricing inquiries for jumbo mortgages increased 7 percent from the week ended July 12. Jumbo activity was 23 percent better than one year prior.

Interest in jumbo loans was piqued by pricing, which was just 24 basis points more than on conforming loans compared to the previous week’s 30 BPS. The jumbo-conforming spread was off by more than half from 51 BPS in the week ended July 20, 2012.

The spread topped out 113 BP most recently in the week ended Feb. 24, 2010, based on the oldest available data from 2009 when the Mortgage Market Index was launched.

The only other category to see an increase this week — albeit less than 1 percent — was refinances, with activity rising 0.8 percent from a week earlier. But refinances have fallen 46 percent from a year earlier.

Refinance share crept up to 51.0 percent from 50.3 percent but has dropped from 75.9 percent at the same point in 2012. This week’s rate-term share was 37.4 percent, and the cashout share was 13.6 percent.

Conventional inquiries were off less than 1 percent and down nearly a quarter from the same week last year.

Purchase financing activity slipped 2 percent for the week but has soared 63 percent on a year-over-year basis.

Inquiries for adjustable-rate mortgages weakened 3 percent but have jumped 59 percent from 12 months earlier. ARM share was 9.4 percent, slightly off 9.6 percent in the previous report. ARMs accounted for only 4.7 percent of business this week in 2012.

A 4 percent decline hit Federal Housing Administration-insured activity — the worst performance of any category. FHA inquiries, which were down by a quarter from a year ago, accounted for 15.6 percent of all inquiries. FHA share was higher in the last report at 16.1 percent and in the same report last year at 16.8 percent.

Thirty-year conforming fixed rates averaged 4.631 percent, down from 4.743 percent. Last year at the same time, 30 year loans averaged 3.755 percent.

An 88-basis-point discount was quoted to 15-year customers this week, not quite as good as 91 BPS last week. The spread has widened considerably from 64 BPS 12 months prior.

An analysis of this week’s Treasury market activity suggests that 30-year mortgage rates could be slightly lower by the next Mortgage Market Index report.

Thirty-year fixed rates tend to move with the yield on the 10-year Treasury, which fell to 2.50 percent Friday from an average of 2.54 percent during the week covered by the Mortgage Market Index report, according to the Treasury Department.

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