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Mortgage Business Drops in Wake of Storm

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As the Northeast began recovery efforts from Hurricane Sandy, weekly mortgage business tumbled even as interest rates were lower. This week’s worst performers were inquiries for jumbo and adjustable-rate mortgages.

An 11.0 percent decline from last week left the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Nov. 2 at 198. Compared to the same week last year, mortgage activity has subsided by nearly a third.

With a 19.5 percent decline from the week ended Oct. 26, ARM activity suffered the most. The number of ARM inquiries have plunged by nearly three quarters from a year earlier.

ARM share was 2.3 percent this week — the lowest level on record since tracking began early in 2011. ARM share was 5.8 percent during the week ended Nov. 4, 2011.

The next-biggest loser was the jumbo category, with inquiries for jumbo mortgages dropping 14.7 percent from seven days earlier. Jumbo share, meanwhile, was trimmed to 7.5 percent from 7.8 percent.

Jumbo activity fell despite an improvement in the cost of a jumbo mortgage; the jumbo-conforming spread narrowed to 63 basis points from last week’s 67 BPS.

Refinance business followed, declining 11.1 percent from a week earlier and down a quarter from a year earlier. Refinance share was mostly unchanged from the previous report at 74.6 percent but was wider than 67.2 percent this week last year. The most recent refinance share reflected a 59.9 percent rate-term share and a 14.6 percent cashout share.

Inquiries for conventional mortgages fell 11.0 percent for the week and dropped by a third from a year ago.

After that were inquiries for loans insured by the Federal Housing Administration, which were down 10.9 percent from the previous report and 29.3 percent lower than the same week in 2011. FHA share was 10.3 percent, about the same as last week and a little higher than 10.0 percent this week last year.

The smallest decline was recorded for purchase financing inquiries: 10.8 percent. Still, purchase activity stands at barely more than half of last year’s level.

Conforming, 30-year, fixed-rate mortgages averaged 3.550 percent, a little lower than 3.572 percent in the previous report and also better than 4.176 percent in the same week during the previous year.

The discount for a 15-year mortgage narrowed to 69 BPS from 70 BPS last week. But the spread has improved from 64 BPS a year prior.

Not much difference can be expected for the average 30-year mortgage in next week’s report based on Treasury market activity. The yield on the 10-year Treasury note averaged 1.75 percent during the week reflected in this report, the same as today’s closing yield, according to data from the Department of the Treasury.

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