As the government shutdown took effect, new mortgage activity turned lower despite an improvement in interest rates. Jumbo and adjustable-rate mortgages took the biggest hits.
New activity fell 8 percent from last week, leaving the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Oct. 4 at 183. The index reflects the average number of pricing inquiries pulled per LoanSifter user.
Compared to the same week in 2012, business was down 40 percent. Year-earlier figures were revised to reflect data from the same provider.
The biggest decline was with jumbo mortgages, with inquiries down 16 percent from the week ended Sept. 27. Still, jumbo business was up 13 percent from a year earlier.
Jumbo inquiries accounted for 7.6 percent of overall activity, down from 8.3 percent in the previous report. Jumbo share has widened, however, from 4.1 percent a year earlier.
The jumbo-conforming spread was mostly unchanged from the prior week at 31 basis points but has improved significantly from 50 BPS during the same week in the prior year.
Adjustable-rate mortgages did nearly as badly as jumbo loans, with inquiries down 15 percent for the week. But, as was the case with jumbo loans, ARM activity was up from a the week ended Oct. 5, 2012, by 58 percent — more than any other category.
ARM share fell to 9.8 percent from 10.6 percent but was much higher than 3.7 percent in the same week last year.
After that was conventional business, which fell 8 percent and has tumbled 45 percent on a year-over-year basis.
Next, was the refinance category, which fell 7 percent from last week. Refinances have plummeted 60 percent from a year ago — the worst performance of any category compared to a year earlier.
Refinance share, however, was up — to 51.3 percent from 50.7 percent. But refinance share has tumbled from 78.5 percent at the same point in 2012. The most recent refinance share included a 37.6 percent rate-term share and a 13.7 percent cashout share.
The week’s smallest decline was with inquiries for loans insured by the Federal Housing Administration. Inquiries were down 5 percent from a week earlier and 42 percent from a year earlier. FHA share rose to 15.2 percent from 14.7 percent but was more narrow than 15.8 percent 12 months earlier.
Conforming 30-year fixed-rate mortgages averaged 4.503 percent, improving from 4.577 percent in the last report but much worse than 3.553 percent in the same report last year.
Fifteen-year mortgages were priced 90 basis points better than 30-year loans, not as good as the 92-basis-point discount in the previous report but far better than the 58-basis-point spread one year prior.
Not much difference in mortgage rates can be expected in next week’s report based Mortgage Daily’s analysis of weekly Treasury market activity. The yield on the 10-year Treasury note averaged 2.64 percent in the week covered by the Mortgage Market Index, while the 10-year yield closed at 2.66 percent Friday, according to the Treasury Department.