Mortgage Daily

Published On: November 11, 2011

New loan activity was lower this week, with inquiries for conventional refinances leading the decline. While government mortgage business was also down, government inquiries made up a bigger share of overall volume this week. Far fewer consumers are shopping for loans to finance a home purchase compared to last year.

Loan originators pulled 17 percent fewer pricing inquiries for prospective borrowers this week than last week based on the U.S. Mortgage Market Index from Mortech Inc. and for the week ended Nov. 11. The index which came in at 242, was down 22 percent from the same week in 2010.

Driving down this week’s business were refinance inquiries, which fell 19 percent. Refinances were 16 percent worse than a year earlier.

Two-thirds of weekly activity was for refinances, just a hair below the 67 percent refinance share reported last week but more than the 61 percent share in the week ended Nov. 10, 2010. The latest refinance share was comprised of a 51 percent rate-term share and a 14 percent cashout share.

The week-over-week decline in purchase activity was 13 percent. But purchase inquiries have fallen nearly a third from a year ago.

Inquiries for mortgages insured by the Federal Housing Administration fell 9 percent from last week’s report. But FHA share rose to 10.85 percent from last week’s 10.01 percent.

New conventional business tumbled 18 percent over the past seven days.

Borrowers who opted for an adjustable-rate mortgage accounted for 5.78 percent of the latest activity, a little less than the 5.83 percent ARM share in the previous report. Meanwhile, inquiries for ARMs were down 18 percent.

Mortgage activity fell as the conventional 30-year mortgages rose 2 basis points from a week earlier and a year earlier to 4.20 percent in today’s report.

Jumbo borrowers paid a 60-basis-point premium this week compared to conforming borrowers, a little less than 61 BPS last week. But the jumbo-conforming spread is well below the 89 BPS a year prior.

Borrowers who opted for a 15-year mortgage had a rate that was 64 BPS better than 30-year borrowers, the same as last week.

While an analysis of movement in the 10-year Treasury yield over the past two weeks suggests that mortgage rates could improve, the Treasury market was closed today even as the Dow Jones Industrial Average soared more than 250 points. That will likely leave Treasury yields much higher on Monday morning and push rates higher in next week’s report.

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