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New Mortgage Business Slips as Rates Inch Up

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As mortgage rates crept higher, new mortgage activity drifted lower this week — with refinances leading the decline. Adjustable-rate activity, however, improved.

At 178 for the week ended Oct. 11, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily was down 3 percent from last week. The index has fallen 36 percent from the same week last year.

This week’s biggest loss was suffered by pricing inquiries for refinances, which dropped 4 percent from the week ended Oct. 4. Refinance activity is off by 58 percent from a year ago — the worst year-over-year decline of any category.

Year-earlier data were revised to reflect the same data provider.

A little less than 51 percent of business was for refinances versus a refinance share of a little more than 51 percent a week earlier. Refinance share sank from the same week in 2012, when it stood at 78.0 percent. This week’s share consisted of a 36.2 percent rate-term share and a 14.7 percent cashout share.

The next worst performer was the jumbo category, with jumbo inquiries falling more than 2 percent. But jumbo activity was up 21 percent compared to the week ended Oct. 12, 2012. Jumbo share rose to 7.6 percent from just under 7.6 percent and was wider than 4.0 percent 12 months prior.

Jumbo mortgages were priced at a 31-basis-point premium over conforming loans, the same as seven days earlier but much more narrow than 51 BPS in the same week last year.

Inquiries for purchase financing were off less than 2 percent for the week but 42 percent better on a year-over-year basis.

Also slipping less than 2 percent were inquiries for conventional loans, though conventional business has fallen 41 percent over the past 12 months.

A 1 percent decline from the last report was recorded for loans insured by the Federal Housing Administration. FHA business was off 36 percent from a year earlier. FHA share inched up to 15.4 percent from 15.2 percent and was barely changed on a year-over-year basis.

Nudging new business down were mortgage rates. Conforming 30-year fixed rates averaged 4.523 percent, edging up from 4.503 in the prior report. Thirty-year rates were much worse than 3.593 percent in the same week last year.

The rate discount for a 15-year mortgage was 90 BPS, roughly the same as last week but much better than 60 BPS 12 months ago.

Treasury market activity suggests that rates could be similar in the next Mortgage Market Index report. The yield on the 10-year Treasury note averaged 2.68 percent in the week covered by the Mortgage Market Index, while the 10-year yield closed at 2.70 percent Friday, according to Treasury Department data.

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