New mortgage business was better for a second consecutive week. Although jumbo mortgages were priced worse relative to their conforming counterparts, the category was one of the strongest during the latest week. As mortgage rates moved higher, shorter term loans became more attractive and adjustable-rate activity jumped by more than a quarter.
An 11 percent rise from last week left the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Jan. 11 at 166. The index has increased 13 percent from the revised level during same week in 2012.
The average number of rate locks pulled per loan originator client of Optimal Blue for adjustable-rate mortgages was up 28 percent from the week ended Jan. 4, stronger than any other category. ARM activity, however, has fallen 46 percent over the past 12 months using revised year-earlier data.
ARM share crept up to 3.4 percent from the prior week’s 3.0 percent. Still, ARM share sits at half the revised level it was at in the week ended Jan. 13, 2012.
A 22 percent week-over-week jump in jumbo rate locks made it the second-best performing category. Jumbo business was up just 6 percent, however, from the revised level a year earlier. Jumbo share inched up to 7.1 percent from the previous week’s 6.5 percent but was off from 7.7 percent in the same week a year earlier.
The gain in jumbo activity came despite deterioration in the premium for a jumbo loan; the jumbo-conforming spread widened to 33 basis points from 31 BPS seven days earlier. But the rate premium for a jumbo mortgage has settled back significantly from a revised 55 BPS in the same week in 2012.
Close behind were mortgages insured by the Federal Housing Administration, which increased 21 percent over the prior week and were up 30 percent from the same week in the prior year. FHA share widened to 19 percent from 18 percent a week earlier and a revised 17 percent a year earlier.
Although the rise in purchase financing activity was nowhere near as robust as it was for ARMs, FHA loans or jumbo mortgages — purchase rate locks were still up 12 percent for the week and 41 percent better than the revised level on a year-over-year basis.
Also lagging the leading categories were rate locks for refinance transactions, which increased 10 percent from the previous week. Refinance business has slowed 3 percent from the same week last year.
Almost 53 percent of the latest activity was refinance, off from more than 53 percent in the prior report and lower than 62 percent in the year-earlier period. The most recent total refinance share consisted of a 42 percent rate-term share and an 11 percent cashout share.
The most lackluster week-over-week performance was with conventional loans, with rate locks up just 9 percent from the previous report. Conventional rate locks have expanded 10 percent for the year using revised data.
Mortgage rates climbed higher over the prior week, with the 30-year, fixed-rate, conventional mortgage averaging 3.742 percent versus 3.672 percent the prior week. The 30 year has declined from a revised 4.192 percent 12 months prior.
Fifteen-year rate locks averaged 78 BPS better than on 30-year loans. The spread improved from 74 BPS a week earlier and 70 BPS a year earlier.