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FHA Leads Mortgage Business Holiday Recovery

As new mortgage activity recovered from the holiday week, product & pricing inquiries for government-insured home loans took a leap.

The U.S. Mortgage Market Index from LoanSifter-Optimal Blue and Mortgage Daily finished the week ended June 6 at 177.

Per-user inquiries by LoanSifter clients climbed 7 percent from the previous report but have fallen 43 percent from the same week last year.

Federal Housing Administration-insured activity leapt 20 percent from the week ended May 30. But FHA business has tumbled 38 percent from a year earlier. FHA share widened to 15.9 percent from 14.2 percent a week earlier and 14.5 percent a year earlier.

Inquiries for purchase financing were up 10 percent for the week but sit 18 percent below the week ended June 7, 2013.

A 9 percent rise was recorded for jumbo business. Jumbo volume stands 22 percent higher than one year prior. Jumbo share inched up to 10.4 percent from 10.2 percent and has grown considerably from 4.8 percent a year ago.

Jumbo mortgages were priced 10 basis points better than conforming loans, increasing from a negative spread of 8 BPS seven days earlier. The jumbo-conforming spread was a positive 30 BPS in the year-earlier report.

Inquiries for adjustable-rate mortgages increased 8 percent from last week and were up by nearly a quarter from the same week last year. ARM share rose to 12.4 percent from 12.2 percent and has more than doubled compared to 5.7 percent one year prior.

Refinance inquiries were up just 3 percent from the previous report but off by 58 percent from 12 months prior. Refinance share slipped to 46.8 percent from 48.5 percent and has tumbled from 63.3 percent in the year-earlier report. This week’s refinance share was made up of a 32.4 percent rate-term share and a 14.4 percent cashout share.

Conventional business crept up 3 percent from the previous report but was down by half from a year ago.

Conforming 30-year fixed rates averaged 4.506 percent in the latest report, worse then the prior week’s 4.455 percent and higher than 4.180 percent 12 months prior.

Fifteen-year rates were 98 BPS better than 30-year rates, about the same spread as in the last report. A year previous, the spread was 81 BPS.

Not much change is likely in interest rates by the next report based on recent Treasury market activity. The yield on the 10-year Treasury note averaged 2.59 percent during the week covered by the Mortgage Market Index report, while the one-year yield closed at 2.60 percent on Friday, according to the Treasury Department.

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