Pricing inquiries for refinance transactions led an overall decline in mortgage activity during the Independence Day holiday week, though adjustable-rate activity was down nearly as much. Mortgage rates eased but are likely to surge in the next report.
A 37 percent drop from last week left the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended July 5 at 183. Business has slowed 9 percent from the same week in 2012.
A 40.0 percent decline in refinance activity was the biggest decline of any category. Refinances have slowed 30 percent over the past year.
With 54.3 percent of pricing inquiries being for refinances this week, refinance share narrowed from 56.5 percent in the previous report. Refinance share was 71.2 percent one year earlier.
Refinance share in the latest report consisted of a 39.9 percent rate-term share and a 14.4 percent cashout share.
Loan pricing inquiries for adjustable-rate mortgages fell 39.5 percent. ARM activity, however, was up a quarter from the week ended July 6, 2012.
ARM share slipped to 7.9 percent from 8.1 percent in the week ended June 28. A year ago, ARM share stood at 5.8 percent.
Conventional business turned in the next-worst performance, falling 39 percent. Conventional pricing inquiries were off 12 percent from the same week last year.
Inquiries for mortgages insured by the Federal Housing Administration retreated 36 percent and were 16 percent slower than one year prior. FHA share inched up to 15.9 percent from 15.6 percent and was 17.4 percent during the year-earlier period.
Purchase business was down by more than a third for the week but expanded 45 percent over the same week in 2012.
The best performance was delivered by the jumbo category, with jumbo pricing inquiries down 31 percent. Jumbo volume accelerated, however, by 16 percent from a year previous.
The average jumbo loan was priced 40 BPS higher than the average conforming loan. The jumbo-conforming spread was 35 BPS a week earlier and 50 BPS a year earlier.
Thirty-year fixed-rate mortgages averaged 4.571 percent, lower than 4.638 percent in last week’s report. The year-prior average was 3.828 percent.
An 83-basis-point discount for 15-year loans was not as good as seven days earlier, when the spread between short- and long-term loans was 87 BPS. A year ago, the spread was just 66 BPS.
Interest rates on residential loans are poised to soar in next week’s report, based on Mortgage Daily’s analysis of Treasury market activity.
In response to a healthy gain in nonfarm payrolls last month, the yield on the 10-year Treasury note shot up to 2.73 percent Friday from the prior day’s close of 2.52 percent. Given that the 10-year yield averaged 2.55 percent during the entire week covered by the latest Mortgage Market Index report, interest rates on home loans are likely to be nearly 20 BPS worse in the next report.
