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New Mortgage Business Picks Up

Coming out of the Christmas holiday and going into New Years Day, loan originators picked up the pace on new business. Government loan demand soared.

A 39 percent increase from a week earlier left the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Jan. 3 at 133. The index moves proportionately with average per-user pricing inquiries pulled by clients of LoanSifter.

Business has slowed considerably compared to the same week in 2013, with year-over-year inquiries down by 47 percent. The year-earlier figures were revised to reflect numbers from the same data provider.

Demand for mortgages insured by the Federal Housing Administration significantly strengthened from the week ended Dec. 27, 2013, with inquiries soaring 72 percent.

FHA share widened to 18.6 percent from the previous week’s 15.1 percent and was also fatter than 16.1 percent in the same week last year.

A 45 percent jump in inquiries for loans to finance home purchases was reported. Compared to the week ended Jan. 4, 2013, purchase activity was up 3 percent.

Conventional activity saw more than a one-third week-over-week increase in inquiries. But conventional inquiries have dropped by more than half from a year earlier.

Refinance business moved 34 percent higher for the week but plummeted nearly two-thirds from the same week in 2013.

In the latest report, 46.5 percent of inquiries were for refinances. The share was lower than 48.5 percent in the previous report and has been slashed from 73.6 percent at the same point in 2013. This week’s share consisted of a 31.4 percent rate-term share and a 15.2 percent cashout share.

Inquiries for jumbo mortgages subsided 6 percent. But compared to the same week last year, jumbo activity was 45 percent higher. Jumbo share slid to 7.8 percent from 11.6 percent but was still up from 4.2 percent a year ago.

Interest rates on jumbo mortgages were 28 basis points higher than on conforming loans. The jumbo-conforming spread worsened from 21 BPS in the last report but was much better than 46 BPS in the year-earlier report.

Interest in adjustable-rate mortgages was off 8 percent from a week earlier but has skyrocketed 179 percent compared to 12 months earlier. ARM share declined to 11.1 percent from 16.7 percent in the last report but was way up from 3.1 percent in the same report last year.

Thirty-year fixed rates averaged 4.826 percent, slightly lower than 4.808 percent one week ago. The 30 year averaged 3.635 percent at this point in 2013.

The rate discount for 15-year mortgages compared to 30-year loans was 101 BPS. The spread slipped from 102 BPS a week prior but has widened greatly from 65 BPS in the year-earlier period.

Fixed rates are poised to come in near their current levels in next week’s report.

During the week covered by the latest report, the yield on the 10-year Treasury note averaged 3.01 percent, according to data from the Treasury Department. The 10-year yield closed at 3.04 percent Friday, suggesting rates could move up maybe 3 BPS in the next report.

However, if next Friday morning’s employment report comes in with a job gain of less than 200,000 in December, downward pressure could be exerted on rates. Job gains significantly in excess of 200,000 could place upward pressure on mortgage rates.

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