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New Mortgage Business Recovers from Holiday

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Loan originators made up some of their losses from the Labor Day holiday with the help of slightly lower interest rates this week. Leading the recovery were adjustable-rate and jumbo mortgages.

At 172, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Sept. 13 was 14 percent higher than one week prior.

Compared to a year prior, however, the index — which is determined based on the average number of pricing inquiries pulled per LoanSifter user — was down by more than a third. Year-earlier figures were revised to reflect the same data provider.

Helping to lift this week’s activity were inquiries for adjustable-rate mortgages, which jumped 21 percent from the week ended Sept. 6. ARM business was nearly two-thirds higher than the same seven-day period in 2012. ARM share, meanwhile, inched up to 10.8 percent from 10.1 percent and more than doubled from 4.2 percent at the same point last year.

Jumbo business was nearly 21 percent better and has climbed more than a third from the week ended Sept. 14, 2012. Jumbo share widened to 8.2 percent from 7.7 percent and was only 3.9 percent 12 months ago.

Interest rates on jumbo mortgages averaged 27 BPS more than on conforming loans, a little worse than the 26-basis-point spread last week but far better than the 46-basis-point spread in place as of the same point in 2012.

The next-biggest gain came from the refinance category, with a week-over-week increase of 16 percent. But refinances have slowed 60 percent from the same week in 2012.

Refinance share inched up to 45.8 percent from 45.0 percent in the previous report. But the share has plummeted from 74.8 percent in the same report last year. The latest report reflected a 32.2 percent rate-term share and a 13.6 percent cashout share.

Conventional pricing inquiries followed, increasing 16 percent for the week but down 41 percent on a year-over-year basis.

The weakest performance was delivered by loans insured by the Federal Housing Administration, with FHA inquiries up only 8 percent. Government-insured business tumbled 39 percent from 52 weeks earlier. FHA share fell to 15.6 percent from 16.4 percent a week earlier and 16.5 percent a year earlier.

Average 30-year fixed rates slipped to 4.836 percent from 4.847 percent but have soared from 3.762 percent at this point in 2012.

The rate discount for a 15-year mortgage was 96 BPS, better than the previous week’s 94 BPS. Borrowers only got a 65-basis-point discount for a shorter-term loan a year ago.

Loan originators and borrowers can expect to see similar rates in the next report based on an analysis of this week’s Treasury market activity.

According to Department of the Treasury data, the yield on the 10-year Treasury note averaged 2.92 percent during the week covered by the most recent Mortgage Market Index, while it closed at 2.90 percent on Friday.

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