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Weekly Refis Creep Up as Rates Drift Lower

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A modest decline in mortgage rates prompted more borrowers to consider refinancing their home loans. Also moving higher was jumbo and adjustable-rate activity.

The Mortgage Market Index from LoanSifter-Optimal Blue and Mortgage Daily was 191 in the week ended May 9.

The index, which moves based on average per-user pricing inquiries pulled by LoanSifter clients, was up 3 percent from a week earlier but down by almost a third from a year earlier.

Inquires for refinances made the biggest gains, increasing more than 6 percent from the week ended May 2. But refinances have fallen by more than half on a year-over-year basis.

Refinance share edged up to 45.1 percent from 43.6 percent but was much lower than the more than two-thirds share in place a year ago. The latest share reflected a 31.2 percent rate-term share and a 13.9 percent cashout share.

Inquiries for adjustable-rate mortgages rose 5.3 percent and have soared 116 percent from the week ended May 10, 2013. ARM share widened to 13.2 percent from 12.9 percent in the last report and 4.2 percent in the year-earlier report.

Next was jumbo business, which improved by 5.1 percent. Jumbo inquiries were 29 percent better than in the same week in 2013. Jumbo share increased to 10.4 percent from 10.1 percent and has soared compared to 5.5 percent 12 months prior.

Jumbo mortgages were priced 5 BPS better than conforming mortgages, improving from the jumbo-conforming spread of a negative 1 basis point in the last report. The spread was a positive 31 BPS one year ago.

A 4 percent week-over-week gain was clocked for conventional loan inquiries, while the category was off 40 percent from the same week in 2013.

After that were inquiries for Federal Housing Administration-insured loans, which were up 3 percent from the last report but 22 percent worse than 12 months earlier.

There was barely any change in purchase inquiries, though purchase activity has improved by a fifth over the past year.

Overall activity picked up as 30-year fixed rates declined 7 BPS from a week previous to 4.563 percent. A year ago, 30-year rates were 3.728 percent.

Borrowers inquiring about 15-year mortgages were quoted rates that were 98 BPS better than on 30-year mortgages, not as good as the 100-basis-point spread in place last week. But the spread has improved substantially from 77 BPS in the same week last year.

An analysis of Treasury market activity suggests that mortgage rates will be at similar levels in the next report.

Treasury Department data indicate that the yield on the 10-year Treasury note, which is tracked by fixed mortgage rates, averaged 2.62 percent in the week covered by the Mortgage Market Index, the same as it closed at on Friday.

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