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Weekly Jumbo, FHA and ARM Business Increase

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Thanks to an increase in activity for jumbo, government-insured and adjustable-rate mortgages, weekly mortgage activity moved higher. A surge in interest rates, however, is likely to put a damper on next week’s activity.

At 181, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Nov. 8 was up 3 percent from the prior week. Compared to the same week during the prior year, the index has drop 39 percent. Year-earlier numbers were revised to reflect information from the same data provider.

The index got the most help from jumbo business, with average pricing inquiries per LoanSifter-user rising 7 percent for jumbo mortgages. The year-over-year improvement was even greater at 23 percent.

Jumbo inquires accounted for 7.8 percent of this week’s activity. Jumbo share was more than the 7.4 percent in the previous report and the 3.8 percent in the report from the same week in 2012.

Pricing on jumbo mortgages was sharply better this week, with the jumbo-conforming spread cut to 26 basis points from 30 BPS in the week ended Nov. 1. The improvement was even more dramatic compared to one year earlier, when the spread was just 49 BPS.

Also providing a big boost to weekly activity were inquiries for loans insured by the Federal Housing Administration, which climbed more than 6 percent. FHA business, however, was down 40 percent from the week ended Nov. 9, 2012. FHA share inched up to 15.9 percent from 15.3 percent but fell from 16.2 percent in the same week last year.

Inquiries for adjustable-rate mortgages expanded by nearly 6 percent from last week and more than doubled from this week in 2012. ARM share widened to 10.8 percent from 10.4 percent and was a mere 3.3 percent one year earlier.

Purchase business picked up, with inquiries increasing 4 percent. Inquiries for purchase financing have surged 38 percent on a year-over-year basis.

Pricing inquiries for refinances barely changed, with a 2 percent week-over -week rise. Refinances have plunged 60 percent from 12 months earlier.

Refinance share slipped to 51.3 percent from 51.9 percent in the prior report and has thinned considerably from 78.4 percent a year ago. The latest refinance share reflected a 36.3 percent rate-term share and a 15.0 percent cashout share.

Conventional loans were the worst-performing category, up just 1 percent for the week. Conventional business was down 44 percent from the same week in 2012.

The Mortgage Market Index moved up despite an increase in 30-year fixed rates, which averaged 4.480 percent in the most recent report versus 4.400 percent in the last report. Thirty-year rates averaged 3.612 percent one year ago.

Fifteen-year mortgages were more competitively priced, with 15-year rates averaging 91 BPS less than 30 year loans. The spread widened from 89 BPS in the previous report and 60 BPS in the year-earlier report.

Mortgage rates are likely to be around 9 BPS worse in the next Mortgage Market Index report thanks to a strong employment report Friday.

The 10-year Treasury note yield, which is closely tracked by 30-year mortgage rates, averaged 2.68 percent during the week covered in the latest Mortgage Market Index report, while it surged to 2.77 percent today, according to data reported by the Department of the Treasury.

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