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Led by Refis, Mortgage Business Slows as Rates Rise

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Refinance activity led an overall decline in mortgage activity thanks to higher interest rates. As jumbo pricing became less competitive, 15-year pricing was more attractive.

Slipping 2 percent from last week, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Aug. 2 was 197. The index retreated 22 percent from the same week in 2012. The year-earlier data was adjusted to reflect a change in data providers.

Refinance pricing inquiries had the biggest loss, falling more than 3 percent from the week ended July 26 and down nearly half from a year earlier.

Refinance share slipped to 49.1 percent from 49.9 percent the prior week and was down from three-quarters in the week ended Aug. 3, 2012. This week’s share consisted of a 36.0 percent rate-term share and a 13.1 percent cashout share.

The next-worst performance was delivered by the conventional category, which was off less than 2 percent for the week and down more than a quarter on a year-over-year basis.

Pricing inquiries for home loans insured by the Federal Housing Administration drifted down less than 2 percent and tumbled 30 percent from one year prior. At a little more than 14.8 percent, FHA share was little changed from just under 14.8 percent the previous week. FHA share was 16.7 percent a year ago.

Jumbo business slipped 1 percent from seven days earlier but has risen 36 percent from 12 months earlier. Jumbo share inched up to 7.4 percent from 7.3 percent and was fatter than 4.2 percent in the same week last year.

At 28 basis points, the spread between jumbo rates and conforming rates was wider than the 23-basis-point spread last week. Still, the jumbo-conforming spread has narrowed considerably from 53 BPS one year prior.

Inquiries for adjustable-rate mortgages drifted less than 1 percent lower but have surged two-thirds from a year prior. ARM share, meanwhile, was 9.2 percent versus the previous week’s 9.1 percent. A year ago, ARM share was only 4.4 percent.

This week’s best-performing category was purchase financing, with activity off only 0.1 percent. Purchase activity has accelerated 61 percent from this week in 2012.

A 4-basis-point increase from the prior report left 30-year fixed-rate conforming loans averaging 4.659 percent. The 30 year was much lower at 3.737 percent in the same report last year.

The spread between 15-year and 30-year mortgages widened to 91 BPS from 87 BPS and was also better than 61 BPS one year ago.

Mortgage rates aren’t likely to veer much in the next Mortgage Market Index report based on Mortgage Daily’s analysis of weekly Treasury market activity.

The 10-year Treasury yield, which averaged 2.64 percent this week, closed at 2.63 percent Friday, according to Treasury Department data. The one-basis-point difference suggest rates are presently poised to come in around the same level in next week’s report.

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