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Refi Activity Nearly Doubles

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Driven by a burst of new refinance activity, the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily reached its highest level since launching. Behind the rosy performance were falling interest rates — and market activity today suggests more improvement is ahead.

The index for the week ended Aug. 5 was 358, leaping from 230 a week earlier. It was also higher than 325 during the same week in 2010.

The Mortgage Market Index has never been this high since its launch in late 2009.

Behind last week’s strong performance were refinances — which rose 91 percent from the previous week. Refinances were 14 percent better than a year earlier.

Refinance share was propelled to 64 percent from 52 percent the previous week. The latest share reflected a 51 percent rate-term share and a 13 percent cashout share.

Purchase production picked up steam, increasing 17 percent over the prior seven days.

Although the proportion of borrowers who were shopping for an adjustable-rate mortgage fell to 8.66 percent from the previous week’s 11.01 percent, ARM activity was still up nearly a quarter.

It was a similar situation for loans insured by the Federal Housing Administration; FHA share fell to 9.88 percent from the prior week’s 11.96 percent, but FHA inquiries rose 25 percent.

Conventional business climbed 60 percent during the most recent week.

New mortgage activity shot up as the 30-year fixed-rate mortgage fell 27 basis points to 4.44 percent. The 30 year, however, was higher than 4.36 percent in the year-prior week.

Today’s Treasury market activity suggests that the 30-year could be nearly 20 BPS better by next week’s report. The yield on the 10-year Treasury was 2.39 percent near midday, better than 2.58 percent at Friday’s close, data from the Department of the Treasury and WSJ.com indicate.

The spread between the jumbo 30-year mortgage and the conforming 30 year widened to 47 BPS from 43 BPS a week prior in the Mortgage Market Index report.

The spread between conforming 15-year loans and 30-year mortgages fell to 82 BPS from 88 BPS — making the shorter-term product less attractive.

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