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Refis Lead Holiday Week Decline in Mortgage Biz

With refinances leading the way, new mortgage activity slowed during the holiday week. Jumbo business was the best performer.

The U.S. Mortgage Market Index from LoanSifter/Optimal Blue and Mortgage Daily for the week ended Sept. 5, which included Labor Day, was 135.

Compared to the previous report, the index — a reflection of average per-user pricing inquiries by clients of LoanSifter — was down 14 percent. The index was off just 11 percent versus the year earlier report.

Out front of this week’s drop were inquiries for refinances, which sank a little more than 16 percent from the week ended Aug. 29. Refinance activity was off just 4 percent from the same week in 2013.

Refinance share slipped to 48.1 percent from 49.0 percent in the prior report. Refinance share was 45.0 percent one year prior. The latest refinance share consisted of a 31.8 percent rate-term share and a 16.2 percent cashout share.

Up next were inquiries for conventional mortgages, which declined nearly 16 percent from seven days prior and were down 18 percent from the week ended Sept. 6, 2013.

After that were inquiries for adjustable-rate mortgages. ARM activity fell more than 15 percent on a week-over-week basis but inched up less than a percent on a year-over-year basis. ARM share dipped to 11.4 percent from 11.5 percent and was just 10.1 percent one year prior.

A 14 percent decline was recorded from the previous week for Federal Housing Administration inquiries. Compared to the same week last year, FHA business was off 15 percent. FHA share inched up to 15.6 percent from 15.5 percent but slid from 16.4 percent one year earlier.

Inquiries for purchase financing were off 13 percent for the week and 16 percent lower than 12 months prior.

The smallest decline was with inquiries for jumbo mortgages, which fell 8 percent from the last report. Jumbo activity, however, has soared 38 percent from a year earlier.

Jumbo share rose to 12.0 percent from 11.2 percent and was far wider than 7.7 percent the same week in 2013.

Interest rates on jumbo loans were 13 basis points better than on conforming mortgages. The jumbo-conforming spread widened from a negative 5 BPS in the last report and swung from a positive 26-basis-point spread in the year-earlier report.

Fixed rates on conventional 30-year mortgages were 4.494 percent, up from 4.474 percent the previous week and down from 4.847 the same week during the previous year.

On 15-year mortgages, rates were 97 BPS better than on 30-year rates. The spread widened from 96 BPS a week earlier and 94 BPS a year earlier.

Interest rates aren’t likely to be much different in the next report based on weekly Treasury market activity. The yield on the 10-year Treasury — a benchmark for fixed mortgage rates — averaged 2.44 percent during the week covered by the latest Mortgage Market Index, according to an analysis of Treasury Department Data. The 10-year yield closed Friday at 2.46 percent.

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