Mortgage Activity Slips and Likely to Fall Further

Mortgage News

Mortgage Daily Staff

                                                 October 28, 2011

Mortgage rates increased this week and might rise again by next week’s report. Meanwhile, new loan inquiries were lower and jumbo pricing was better this week. Financing activity for home purchases has been persistently falling and is down more than a fifth from the same week last year.

New loan inquiries were down 3 percent from last week in the U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com for the week ended Oct. 28. The index itself came in at 256.

Compared to a year earlier, business was down 14 percent.

Refinance activity retreated 4 percent for the week and 9 percent compared to the same week last year. The refinance share, meanwhile, was 64 percent, off from 65 percent last week but bigger than 60 percent during the same week last year. This week’s share reflected a 49 percent rate-term share and a 15 percent cashout share.

The purchase index was unchanged from last week but 22 percent worse than a year ago.

Also unchanged from last week were adjustable-rate inquiries and inquiries for loans insured by the Federal Housing Administration. But FHA share crept up to 11.09 percent from 10.81 percent seven days ago, while adjustable-rate share moved up to 5.92 percent from 5.79 percent.

Conventional mortgage activity declined 3 percent this week.

Behind this weak performance during the past seven days were rising rates. The average 30-year, fixed-rate, conforming mortgage was 4.345 percent, creeping up from 4.329 percent last week. The 30 year was lower at 4.187 percent 12 months prior.

Borrowers paid a premium of 60 basis points this week for a jumbo mortgage, better than the 64-basis-point spread last week and a year ago.

Conforming borrowers who opted for a 15-year mortgage got a 68-basis-point discount this week, not as good as the 70 BPS spread a week ago.

It looks like this week’s uptick in mortgage rates could be even worse next week based on Treasury market activity.

The yield on the 10-year Treasury note closed at 2.34 percent today, climbing from 2.23 percent seven days prior. The 11-basis-point rise versus in the Treasury yield versus the 2-basis-point weekly increase in mortgage rates suggests that the weekly average has more room to climb by next Friday as long as no major events rock the financial markets.

Mortgage Daily Staff

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