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Holiday Week Hard on New Business

Mortgage News

As expected, Labor Day weekend took a toll on new mortgage business, with refinances suffering the biggest setback. Also hit hard were conventional inquiries.

Overall activity tumbled 21 percent from seven days earlier, putting the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily at 151 for the week ended Sept. 6.

The index, which reflects average pricing inquiries per LoanSifter user, was down by 30 percent from the same week in 2012. Year-earlier data was revised to reflect numbers from the same data provider.

A drop of more than a quarter from the week ended Aug. 30 was recorded for refinance inquiries. Refinance activity has slowed 58 percent from a year earlier.

Refinance share fell to 45.0 percent from 47.9 percent and was way off from 74.0 percent in the week ended Sept. 7, 2012. This week’s share reflected a 31.9 percent rate-term share and a 13.1 percent cashout share.

The next-biggest hit was taken by conventional pricing inquiries, which sank 22 percent for the week and 37 percent on a year-over-year basis.

Inquiries for Federal Housing Administration-insured mortgages fell 19 percent from seven days earlier and were more than 30 percent off from this week last year. FHA share inched up to 16.4 percent from 16.1 percent but was unchanged from one year prior.

Pricing inquiries for adjustable-rate mortgages declined 19 percent but were 59 percent better than this week in 2012. ARM share moved up to 10.1 percent from 9.9 percent and has more than doubled from the same week a year previous, when the share was just 4.5 percent.

Jumbo business retreated 16.9 percent from the previous report but was up more than a quarter from the same seven-day period in 2012. Jumbo share was 7.7 percent, up from 7.4 percent the prior week and 4.3 percent one year earlier.

The premium for a jumbo mortgage was unchanged at 26 basis points. But it was far less than the 52-basis-point jumbo-conforming spread one year prior.

The week’s best performer was purchase financing, which has fallen just 16.5 percent over the past seven days. Purchase business was up by nearly half from the same point in 2012.

Conforming 30-year fixed rates averaged 4.847 percent, climbing from 4.759 percent in the previous Mortgage Market Index report. The rise was even more apparent compared to the same week last year, when 30-year rates were 3.748 percent.

The 94-basis-point discount quoted to 15-year borrowers was the same as in the last report and far better than the 63-basis-point spread in the year-earlier report.

Mortgage rates could be around 5 BPS worse in the next report based on this week’s Treasury market activity.

During the week covered by the Mortgage Market Index, the 10-year Treasury yield averaged 2.89 percent, while it closed at 2.94 percent Friday, according to Treasury Department data.

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