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Refis Take a Hit from Rate Surge

Mortgage News

Weekly mortgage market activity was down this week as a result of an interest rate surge, with refinances taking the biggest hit. Conventional loan activity also fared poorly.

At 168, the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Nov. 15 declined 7 percent from the prior report.

Compared to one year earlier, mortgage activity retreated by nearly a third. Year-earlier statistics were revised to reflect the same data provider.

With a decline of 9 percent from the week ended Nov. 8, refinances turned in the worst performance. Pricing inquiries for refinance transactions were down 56 percent from the same week in 2012.

This week’s refinance share was 50.4 percent, off from 51.3 percent in the previous report and 77.7 percent in the year-earlier report. The most recent share consisted of a 35.3 percent rate-term share and a 15.1 percent cashout share.

Inquiries for conventional loans fell 8 percent and were down 38 percent from the week ended Nov. 16, 2012.

Jumbo mortgages took a 6 percent hit but rose 23 percent from one year prior. Jumbo share increased to 7.8 percent from 7.7 percent and has widened significantly from 4.3 percent in the same week last year.

Jumbo mortgages were priced 23 basis points higher than conforming loans, better than the 26-basis-point jumbo-conforming spread in the previous report and the 46-basis-point spread in place during the same week in the previous year.

A 5 percent drop was clocked for purchase financing inquiries, though purchase activity remains up by more than half from a year ago.

Inquiries for mortgages insured by the Federal Housing Administration fell 4 percent and have tumbled 30 percent over the past year. FHA share increased, however, to 16.5 percent from 15.9 percent and was even wider than 16.1 percent in the year-earlier report.

The best week-over-week performance was delivered by adjustable-rate mortgages, which slipped less than a percent from last week. ARMs have soared 132 percent over the past year.

ARM share was 11.5 percent, increasing from 10.8 percent a week earlier and 3.4 percent a year earlier.

Overall activity was pulled down by mortgage rates, with average 30-year fixed rates rising to 4.558 percent from 4.480 percent seven days prior. The 30 year was just 3.612 percent one year ago.

A 93-basis-point discount was quoted to 15-year shoppers. The spread between longer- and shorter-term loans increased from 91 BPS in the last report and 59 BPS in the year-earlier report.

Next week’s rates aren’t likely to look much difference based on Mortgage Daily’s analysis of Treasury market activity. The Department of the Treasury data indicate that the 10-year Treasury yield averaged 2.74 percent during the week covered by the latest Mortgage Market Index, while the 10-year yield closed at 2.71 percent Friday.

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