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Mortgage Market Metrics Deteriorate

New mortgage business slowed this past week as interest rates rose — with refinance activity taking the biggest hit. Compared to a year earlier, however, most metrics have improved considerably. The government’s share of the mortgage market was fatter, and jumbo pricing improved.

At 170, the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Jan. 25 was down 22 percent from the prior report. However, the index — which reflects rate lock activity by clients of Optimal Blue — was 27 percent better than the same week in 2012.

Refinance rate locks had the biggest impact on activity, tumbling 29 percent from the week ended Jan. 18. But compared to the revised level a year earlier, refinances have increased 18 percent.

Refinance share fell to 51 percent from the previous week’s 56 percent. In the week ended Jan. 27, 2012, refinance share was also wider at 55 percent. The latest share reflected a 40 percent rate-term share and an 11 percent cashout share.

Also dragging down the index were adjustable-rate mortgages, with ARM activity off a quarter from the previous week and falling nearly 37 percent from the same week during the previous year. ARM share slipped to 3.2 percent from 3.3 percent and was off by half from 6.4 percent at the same point in 2012.

Next was conventional business, which fell 24 percent for the week but was up 28 percent versus 12 months prior.

After that was a 23 percent week-over-week drop in jumbo rate locks, though jumbo activity has grown by more than a quarter on a year-over-year basis. Jumbo rate locks accounted for 7.8 percent of total activity, off from 7.9 percent a week earlier and a year earlier.

Interest rates on jumbo mortgages were 26 basis points higher than on conventional mortgages. The jumbo-conforming spread was down from 30 BPS seven days earlier and 42 BPS 12 months earlier.

With a 14 percent decline from the previous week, purchase business followed. Like most other categories, however, purchase activity was up from the year-earlier period — by 37 percent.

The week’s smallest decline was recorded for mortgages insured by the Federal Housing Administration: 11 percent. FHA rate locks were up 21 percent from the same week a year prior. FHA share widened to 19 percent from 17 percent in the prior report but was slimmer than 20 percent a year prior.

A 3-basis-point rise from last week left the average 30-year, fixed-rate mortgage at 3.74 percent. Thirty-year rates have improved 48 BPS over the past 12 months.

The spread between 15- and 30-year mortgages was just under 74 BPS versus just over 74 BPS in the last report. The spread was 72 BPS a year ago.

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