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Refi, Conventional Business Soars

Refinance loan prospects rushed to lock in their interest rates this week as 30-year mortgage rates moved 8 basis points lower. The conventional category also contributed to the surge in new activity, as did home purchase financing. Jumbo rates were little different than conforming interest rates this week. Overall business has nearly doubled from 12 months earlier.

A 53 percent increase from last week was recorded for the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily, with the index ascending to 252 for the week ended March 22. Overall activity was 95 percent better than the revised level during the same week last year.

Refinance rate locks rose nearly two thirds from the week ended March 15 — more than any other category. Refinance business was 118 percent higher than a year ago — also more than any other category.

Refinance share widened to 42.5 percent from 39.5 percent the previous week and 37.9 percent the week ended March 23, 2012. This week’s total refinance share reflected a one-third rate-term share and a 9.5 percent cashout share.

Conventional rate lock activity climbed 58 percent from last week, while the category was 114 percent more busy than the same week last year.

Rate locks for purchase financing improved by 46 percent from a week earlier and were up 81 percent from a year earlier.

The increase in the volume of rate locks for mortgages insured by the Federal Housing Administration wasn’t as robust as overall activity, with the FHA index rising 35 percent from the previous report. FHA activity was up 41 percent from a year ago. FHA share slipped to 19.1 percent from 21.6 percent and slid from 26.4 percent in the year-earlier period.

An 18 percent week-over-week increase in jumbo business was the smallest of all categories. The weaker jumbo performance came despite that the premium for a jumbo loan was reduced to 15 basis points from an 18-basis-point jumbo-conforming spread a week ago and 49-basis-point spread a year ago.

On a year-over-year basis, the improvement in non-conforming rate lock volume was 111 percent.

Behind the week’s collective strength were mortgage rates, which fell as investors, spooked by the banking crisis in Cyprus, sought safe haven in the U.S. Treasury market.

Thirty-year fixed-rate mortgages averaged 3.921 percent, dropping from 3.997 percent in the prior Mortgage Market Index report. The 30 year was a revised 4.374 percent one year prior.

There was no change from the previous week in the 85-basis-point spread between 15- and 30-year loans, though it was better than 79 BPS during the same week in the prior year.

Interest rates are likely to be slightly lower in the next Mortgage Market Index report based on a Mortgage Daily analysis of weekly Treasury market activity.

During the week covered by the latest report, the 10-year Treasury note yielded 1.96 percent, according to U.S. Treasury Department data. The 10-year yield closed Friday at 1.93 percent.

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