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Business Up as Jumbo Spread Widens

Rates

The spread between conforming and jumbo mortgages took a turn for the worse this past week. Still, mortgage activity managed to eke out a gain.

A one-basis-point improvement was reported in the average 30-year fixed-rate mortgage, leaving it at 5.06% in Freddie Mac’s Primary Mortgage Market Survey for the week ended today. A year ago, the 30-year was lower at 4.84%.

The conventional 30-year rate eased from just over 5.11% seven days earlier to just under 5.11% in the Mortech-MortgageDaily.com Mortgage Market Index for the week ended April 28. But the jumbo 30 year jumped to 5.84% from last week’s 5.79% — pushing the spread between the conventional and jumbo 30-year mortgage to 73 BPS from 68 BPS in the previous report.

No change from last week was reported by Freddie for the average 15-year fixed-rate mortgage, which was 4.39%. But the 15-year conventional rate in the Mortech-MortgageDaily.com report rose to 4.41% from 4.35%.

Mortgage rates are likely to stay put based on the 10-year Treasury bond yield, which fell to 3.76% today from 3.80% last Thursday, according to data published by the U.S. Department of the Treasury.

More than half of the panelists surveyed by Bankrate.com for the week April 28 to May 5 predicted no changes ahead for mortgage rates. But nearly a third forecasted an increase of at least 3 BPS during the next week, and 16% predicted a decline.

Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage fell to 4.00% from 4.03%, while the one-year ARM increased to 4.25% from 4.22%. The one-year was 4.78 percent 12 months earlier.

The yield on the one-year Treasury bill, which is the index for the one-year ARM, fell to 0.42% today from 0.45% seven days prior, the Treasury reported. Meanwhile, the six-month London Interbank Offered Rate — or LIBOR — jumped to 0.51% yesterday from 0.47% the prior Wednesday, according to Bankrate.com.

ARM share was unchanged from a week earlier at 6.0% in the Mortgage Bankers Association’s latest survey.

The Mortgage Market Index improved to 228 from 224 last week.

Overall applications were down 3% on a seasonally adjusted basis in MBA’s survey, which reflected last week’s activity. A 7% rise in purchase activity was not enough to offset a 9% decline in refinances.

The average U.S. loan amount in the Mortech-MortgageDaily.com report was $204,583, not much different than $204,431 the week before. Washington, D.C., had the highest loan amount for the sixth consecutive week — with the latest week coming in at $302,757. The lowest average was South Dakota’s $147,013.

The average jumbo loan amount fell to $642,899 from $658,615 in the previous Mortgage Market Index report.

Refinances represented 31 percent of activity in the Mortgage Market Index report, down from one-third last week. This week’s number reflected a 21% rate-term refinance share and an 11% cashout refinance share.

In MBA’s report reflecting last week’s activity, the refinance share declined to 56% from 60%.

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