Weekly Mortgage Market Index Slips Despite Improved Rates

Weekly Mortgage Market Index Slips Despite Improved Rates

DALLAS — (July 23, 2012) New mortgage activity took a dip this week, with inquiries for jumbo mortgages leading the pack. The decline came despite a new low for mortgage rates. But one category — adjustable-rate mortgages — actually experienced an uptick.

The average mortgage loan originator pulled 6 percent fewer pricing inquiries during the latest seven-day period, putting the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended July 20 at 236.

The Mortgage Market Index has returned to January’s level, making the index over the year largely flat despite last week’s spike.

Compared to a year previous, however, new loan inquiries were 13 percent higher.

“We’re still seeing some volatility in the demand lenders are responding to with our Product & Pricing Tools, but the rates they are responding with continue to trend downward,” said Don Kracl, CEO of Mortech. “Unfortunately, we do not see a clear correlation between falling rates and demand, which has, despite some week-to-week volatility, been largely flat over the year thus far, according to our data.”

Jumbo loan inquiries fell 8 percent from the prior week. Helping to drive down activity was the premium for a jumbo mortgage, which climbed to 85 basis points from the previous week’s 81 BPS. The share of overall activity that was jumbo slipped to 8.6 percent from 8.8 percent.

Conventional loan inquiries were down 6 percent from the week ended July 13 but 15 percent higher than the week ended July 22, 2011.

Also down 6 percent on a week-over-week basis were inquiries for loans insured by the Federal Housing Administration. Compared to a year earlier, FHA business was up 1 percent. FHA share was unchanged from seven days prior at 10.7 percent, though it was down from 12.1 percent this week last year.

Even new refinance activity was off 6 percent from the last report. But refinances were 62 percent stronger than this week in 2011. Refinance share was unchanged from the prior report at three-quarters but higher than a little over half a year ago. The latest week’s share was comprised of a 61 percent rate-term share and a 13 percent cashout share.

The week-over-week decline for new purchase activity was just 5 percent. But purchase business sat 40 percent lower than the same week last year.

Inquiries for the best-performing category, ARMs, were 6 percent stronger than a week previous — though ARM activity was nearly two-thirds worse than a year earlier. ARM business picked up as ARM share moved up to 3.2 percent from 2.9 percent. ARM share was 9.9 percent at the same point in 2011.

Mortech data indicate that interest rates being offered to new borrowers are still dropping, down 10.6 percent since the beginning of the year to 3.480 percent on conventional 30-year fixed-rate loans.

The average 30-year fixed-rate mortgage slipped less than a basis point from a week earlier to 3.63 percent — another new record low. The 30 year was 4.70 percent 12 months earlier.

The spread between 15- and 30-year mortgages widened to 65 BPS from the prior week’s 63 BPS. The discount for a 15-year loan was much better the same week last year at 88 BPS.