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FHA, Purchase Activity Tumbles

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As prospective borrowers settled into a long weekend, inquiries for government-insured loans and purchase financing took the biggest hit. Not even low mortgage rates that are on a declining trajectory could halt the overall holiday slowdown. Jumbo mortgage inquiries, however, picked up.

Loan originators pulled 7 percent fewer inquiries than a week earlier, placing the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Aug. 31 at 208. The index was off by nearly a quarter compared to a year earlier.

A 12 percent decline from the week ended Aug. 24 in inquiries for Federal Housing Administration loans helped pull down overall activity. FHA inquiries were 11 percent less than the same week last year. FHA share slipped to 11.1 percent from 11.8 percent but was higher than 9.6 percent this week last year.

Home shoppers slowed their requests for purchase financing pricing inquiries by 11 percent for the week and have curtailed shopping by 38 percent compared to the week ended Sept. 2, 2011.

Adjustable-rate mortgage inquiries were off 8 percent for the week and have declined 69 percent over the past 12 months. ARM share eased to 2.79 percent from 2.82 percent in last week’s report.

A 6 percent decline from last week was recorded for conventional inquiries, which were down a quarter from the same week in 2011.

Refinance business fell just 6 percent and was down 17 percent from a year ago. Refinance share was 72.5 percent, up from the prior week’s 71.2 percent and wider than the two thirds level in the year earlier report. The most recent week’s share reflected a 57.8 percent rate-term share and a 14.7 percent cashout share.

The only category to see an improvement from last week was jumbo lending. Inquiries inched up 1 percent even though the premium for a jumbo mortgage jumped to 71 basis points from 63 BPS last week.

The discount for a 15-year loan slipped to 65 BPS from last week’s 69 BPS and 86 BPS this week last year.

Conforming conventional loans were priced at an average of 3.684 percent, falling from 3.774 percent in the previous report. Thirty-year loans average 4.335 percent one year ago.

Mortgage rates could be better in next week’s Mortgage Market Index report given Treasury market activity this past week. The 10-year Treasury yield averaged 1.65 percent during the week covered in the latest report, while the 10-year Treasury yield was 1.57 percent today, according to Department of the Treasury data.

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