As rising rates have driven down the share of borrowers seeking rate-term refinances to the lowest level in six months, rising home values have driven the share of borrowers seeking cashout loans to a record high.
The U.S. Mortgage Market Index from Mortgage Daily, an indication of upcoming loan originations based on average per-user rate locks by OpenClose customers, was 92 in the week ended Jan. 5.
That was a 29 percent improvement for the index compared to the previous week, which included Christmas. There are no adjustments made to the index for seasonal variations.
A 7 percent decline in business was recorded versus the same week last year.
Rate locks for refinances soared from the week ended Dec. 29, 2017, by 37 percent — the most of any category.
The increase from a year prior was 6 percent.
Refinance share was 43.3 percent, wider than 40.8 percent a week earlier and 38.2 percent a year earlier.
This week’s refinance share included a 14.5 percent rate-term share — the thinnest it’s been since the week ended July 28, 2017. The diminishing share reflects rising interest rates. Also included in the share was a 28.9 percent cashout share — the widest share on record since the Mortgage Market Index was launched in late 2009. The broadening cashout share is being driven by rising home prices, which in many areas have reached a record high while padding the equity of homeowners.
The Conventional MMI increased 29 percent to 56 but has decreased 11 percent from the week ended Jan. 6, 2017.
Government rate locks climbed 28 percent from the last report but were mostly the same as in the same-seven days last year. Government share was trimmed to 39.5 percent from 39.8 percent but was wider than 36.7 percent this week last year. The latest share was comprised of a 24.6 percent FHA share and a 14.9 percent VA share.
Although the Purchase MMI ascended 23 percent from the prior week to 52, it tumbled from a year prior by 15 percent — the largest year-over-year decline of any category.
Rate locks for jumbo mortgages slipped 2 percent but have skyrocketed from a year ago by 91 percent — the strongest year-over-year improvement. At 10.7 percent, jumbo share was more narrow than 14.1 percent a week ago but much wider than 5.2 percent one year ago. The spread between jumbo rate and conforming rates widened to 57 basis points from 55 BPS but was much less than 76 BPS in the year-earlier report.
A 10 percent drop from last week for adjustable-rate mortgage rate locks was the worst week-over-week performance, though ARM activity was up 31 percent from this week in 2017. ARM share was slashed to 10.7 percent from 15.3 percent as fixed mortgage rates moved lower this past week. But ARM share was wider than 7.6 percent twelve months ago.
