Mortgage Daily

Published On: December 23, 2011

As consumers focused their shopping on holiday gifts this week, fewer were out shopping for a mortgage. Government business was most impacted, while loan inquiries for purchase financing saw the smallest decline of any category. Mortgage rates are likely to escalate in the next report but still remain ridiculously low.

The U.S. Mortgage Market Index from Mortech Inc. and for the week ended Dec. 23 was 193 — the slowest week for loan inquiries since the Thanksgiving index of 161. The prior week’s index was 220. Business has also slowed since the same week last year, when the index was 205.

The holidays took the biggest toll on inquiries for loans insured by the Federal Housing Administration, which fell 14 percent from last week. FHA share was trimmed to 10.99 percent from 11.20 percent. Conventional inquiries were down 12 percent.

Refinances fell 13 percent from the last report but were 27 percent higher than a year prior. Refinance share fell to 68 percent from 69 percent and was a little more than half in the year-earlier report. The current refinance share reflects a 54 percent rate-term share and a 14 percent cashout share.

The share of loan shoppers searching for an adjustable-rate mortgage slipped to 5.33 percent from 5.40 percent in the prior report. ARM inquiries declined 13 percent.

Purchase inquiries saw the least damage, falling 10 percent from last week. But purchase financing was 39 percent worse than a year earlier.

The 30-year mortgage averaged 4.06 percent, better than 4.07 percent seven days prior. The 30 year has never been this low since the first Mortgage Market Index was reported for the week ended Dec. 16, 2009.

During this week last year, the 30 year was 4.96 percent.

An analysis of market data reported by the Department of the Treasury indicates that mortgage rates could be around 12 BPS worse by the time the next report is issued. The Mortgage Market Index is based on activity for the last week, when the 10-year Treasury yield averaged 1.95 percent. But as of today, the 10-year yield sits at 2.03 percent.

Fifteen-year mortgages were priced at a 65-basis-point discount over 30-year loans this week, not as good as the 69-basis-point spread in the last report.

Jumbo mortgages were priced at a 75-basis-point premium over conforming loans, a little worse than 74 BPS a week ago.

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