ARMs, Jumbo Inquiries Lead Decline in Weekly Mortgage Market Index

ARMs, Jumbo Inquiries Lead Decline in Weekly Mortgage Market Index

DALLAS — (Nov. 5, 2012) As Northeast recovery efforts began, weekly mortgage business tumbled. Not even continued low interest rates could lift new activity. Hardest hit were inquiries for jumbo and adjustable-rate mortgages.

An 11.0 percent decline from a week earlier left the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended Nov. 2 at 198. Compared to the same week last year, mortgage activity has subsided by nearly a third.

With a 19.5 percent decline from the week ended Oct. 26, ARM activity suffered the most. The number of ARM inquiries have plunged by nearly three quarters from a year earlier.

ARM share was 2.3 percent — the lowest level on record since tracking began in early 2011. ARM share was 5.8 percent during the week ended Nov. 4, 2011.

The next-biggest loser was the jumbo category, with inquiries for jumbo mortgages dropping 14.7 percent from seven days earlier. Jumbo share, meanwhile, was trimmed to 7.5 percent from 7.8 percent.

Jumbo activity fell despite an improvement in the cost of a jumbo mortgage; the jumbo-conforming spread narrowed to 63 basis points from the previous week’s 67 BPS.

Refinance business followed, declining 11.1 percent from a week earlier and down a quarter from a year earlier. Refinance share was mostly unchanged from the previous report at 74.6 percent but was wider than 67.2 percent the same week last year. The most recent refinance share reflected a 59.9 percent rate-term share and a 14.6 percent cashout share.

Inquiries for conventional mortgages fell 11.0 percent for the week and dropped by a third from a year prior.

After that were inquiries for loans insured by the Federal Housing Administration, which were down 10.9 percent from the previous report and 29.3 percent lower than the same week in 2011. FHA share was 10.3 percent, about the same as last week and a little higher than 10.0 percent this week last year.

The smallest decline was recorded for purchase financing inquiries: 10.8 percent. Still, purchase activity stands at barely more than half of the level at the same point in 2011.

Conforming, 30-year, fixed-rate mortgages averaged 3.550 percent, a little lower than 3.572 percent in the previous report and also better than 4.176 percent in the same week during the previous year.

The discount for a 15-year mortgage narrowed to 69 BPS from 70 BPS, but the spread has improved from 64 BPS a year prior.