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ARM and Jumbo Activity Jump

Mortgage News

A surge in inquiries for adjustable-rate mortgages led overall activity higher this week. Jumbo business also strengthened.

The average mortgage loan originator client of Mortech Inc. pulled 6 percent more pricing inquiries this week than last week, leaving the U.S. Mortgage Market Index from Mortech and Mortgage Daily for the week ended Dec. 7 at 201. The index has fallen 19 percent from the same week in 2011.

Out front of all other categories were ARM inquiries, which rose 15 percent from the week ended Nov. 30. ARM activity, however, has fallen by more than two thirds from a year earlier.

ARM share edged up to 2.4 percent from 2.2 percent last week. ARM share was 6.2 percent in the same week last year.

Another strong performer was the jumbo category, with jumbo inquiries climbing 13 percent from the previous report. Jumbo share, meanwhile, moved up to 9.1 percent from 8.6 percent.

The improvement in jumbo activity came despite that jumbo mortgages were priced an average of 55 basis points higher than conforming loans, worse than 51 BPS a week prior. The jumbo-conforming spread, however, has deflated from 69 BPS in the week ended Dec. 9, 2011.

Inquiries for mortgages insured by the Federal Housing Administration increased 8 percent from last week but were off more than a quarter from a year ago. FHA share was 9.8 percent, up from the prior week’s 9.6 percent but down from 11.0 percent in the same week during the prior year.

Refinance business was up 7 percent for the week but 6 percent short of the year-earlier level. Refinance share was 76.9 percent versus 76.5 percent in the previous report and 66.9 percent a year prior. The latest refinance share consisted of a 62.5 percent rate-term share and a 14.4 percent cashout share.

Inquiries for conventional mortgages grew 6 percent for the week but tumbled 18 percent from a year earlier.

The purchase financing category put in the most lackluster performance, rising just 5 percent from the previous report. Purchase inquiries were down 44 percent from the year-earlier level.

Conforming fixed rates were a little better this week, with the 30-year mortgage averaging 3.448 percent, down from 3.489 percent in the previous report and falling from 4.133 percent during the same week in the previous year.

Borrowers who chose a shorter-term 15-year mortgage were quoted rates that averaged 62 BPS better than on 30-year loans, not as good as the 64-basis-point discount last week.

Next week’s rates are likely to be around 3 BPS higher based on a Mortgage Daily analysis of Treasury market activity.

During the seven-day period that was covered in the latest Mortgage Market Index report, the yield on the 10-year Treasury note averaged 1.61 percent, according to data reported by the Department of the Treasury. The 10-year yield closed at 1.64 percent Friday.

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