More homeowners inquired about a refinance this past week as interest rates improved. Refinance activity was even higher than a year ago when the mortgage industry was in the midst of the biggest quarterly refinance wave during the past two years. Rates are poised to come in even lower in the next report.
Loan pricing inquiries jumped 14 percent from the prior week based on the U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com for the week ended Nov. 4. The report reflects the number of average mortgage inquires per loan originator.
Compared to a year earlier, new business inched up 2 percent.
Leading the Mortgage Market Index higher were refinance inquiries, which jumped 21 percent over the past week. Refinances were 15 percent higher than the week ended Nov. 3, 2010. The year-over-year performance is significant given that fourth-quarter 2010 refinance closings were higher than any quarter during the past two years based on data reported by Fannie Mae.
The share of the past week’s activity that was for refinance transactions rose to 67 percent from 64 percent and was also higher than 60 percent during the same week in 2010. The total refinance share included a 53 percent rate-term share and a 14 percent cashout share.
The number of prospective borrowers shopping for a loan to finance a home purchase moved up 3 percent over the past seven days. But purchase activity was down 17 percent from a year earlier — reflecting the U.S. real estate market’s persistent inability to recover despite historically low mortgage rates.
Conventional loan inquiries climbed 16 percent, while inquiries for mortgages insured by the Federal Housing Administration were up 4 percent. FHA share fell to 10 percent from 11 percent.
The share of consumers who opted for an adjustable-rate mortgage slipped to 5.83 percent from last week’s 5.92 percent. Still, there were 13 percent more borrowers shopping for an ARM this week than last week.
Increased activity in the mortgage marketplace was the result of falling interest rates. The average 30-year, conforming, fixed-rate mortgage was priced at 4.18 percent, improving 17 basis points from a week earlier and 5 BPS better than a year earlier.
Prospective borrowers inquiring about a 15-year mortgage got a 64-basis-point discount over 30-year borrowers this week, not as good as the 68-basis-point discount afforded borrowers in the prior-week report. The spread between 15- and 30-year loans was 63 BPS a year ago.
Jumbo shoppers, those seeking a loan in excess of $417,000, paid a premium of 61 BPS, a little more than the 60-basis-point premium in the previous report. But jumbo pricing has improved significantly from this week in 2010, when the jumbo-conforming spread was 84 BPS.
The yield on the 10-year Treasury note fell 28 BPS from the previous Friday according to data delivered by the Department of the Treasury. Given that mortgage rates only fell 17 BPS during the same period — there might be more room for rates to fall by the next report.
However, as drama continues to unfold in the Greek debt crisis — it’s anybody’s guess where global financial markets will leave interest rates standing in next week’s report.