New Mortgage Activity Jumps

New Mortgage Activity Jumps

DALLAS — (July 16, 2012) Thanks to rates that continue to defy prior lows, mortgage activity shot up by nearly half coming out of the holiday week — with refinances and jumbo activity leading the way.

At 251, the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended July 13 was 46 percent higher than the previous week. The index, which reflects the average number of pricing inquiries pulled by Mortech clients, was 7 percent better than the same week last year.

The volume of refinance inquiries increased 55 percent from the week ended July 6 and was up by half compared to a year earlier.

Refinance share was fatter, widening to 75 percent from the prior week’s 70 percent. The share was just 54 percent during the week ended July 15, 2011.

The most recent week’s share consisted of a 62 percent rate-term share and a 13 percent cashout share.

Also shooting up 55 percent were inquiries for jumbo mortgages. Jumbo share inched up to 8.8 percent of last week’s activity from 8.3 percent in the previous report. The improvement in jumbo performance came despite that the premium for a jumbo loan rose to 81 basis points from 70 BPS the prior week. The spread between jumbo and conforming mortgages was only 47 BPS a year prior.

Conventional business climbed 47 percent for the week, while inquiries for mortgages insured by the Federal Housing Administration were up 41 percent. FHA activity, however, was barely changed from the same week in 2011.

FHA share, meanwhile, eased to 10.7 percent from 11.1 percent and was down from 11.7 percent 52 weeks earlier.

The number of borrowers out shopping for an adjustable-rate mortgage jumped by more than a third compared to a week earlier, though ARM activity has fallen more than two thirds from the same week last year. The week-over-week rise in ARM inquiries came despite a decline in ARM share to 2.9 percent from 3.1 percent in the previous report. ARM share was 9.9 percent in the year-earlier report.

Falling rates prompted a quarter more prospective borrowers to shop for purchase financing. Still, purchase activity lags the same week in 2011 by 42 percent.

In addition to the bounce coming out of the July fourth holiday week, falling mortgage rates helped lift loan activity — with conforming 30-year fixed-rate mortgages averaging a record-low 3.633 percent versus 3.733 percent a week previous. A year previous the 30 year averaged 4.68 percent.

Fifteen-year mortgages were priced at a 63-basis-point discount to 30-year loans, losing some of their luster from the previous week when the discount was 65 BPS. The spread between 15- and 30-year loans was 86 BPS the same week in 2011.