For the third week in a row, refinance activity has strengthened as interest rates on home loans have moved lower. Jumbo mortgage rates, meanwhile, fell further below conforming rates.
At 194 for the week ended May 16, the Mortgage Market Index from LoanSifter-Optimal Blue and Mortgage Daily was up nearly 2 percent from seven days earlier.
But the index, which reflects average per-user pricing inquiries at LoanSifter, has tumble by nearly a quarter from the same week in 2013.
Refinance activity had the biggest week-over-week gain, rising nearly 6 percent from the week ended May 9. But refinance inquiries have spiraled 46 percent lower from a year earlier.
Refinances accounted for 46.9 percent of all activity, up from the previous week’s 45.2 percent but well short of the two-thirds refinance share during the same week last year. The most recent share reflected a 32.5 percent rate-term share and a 14.4 percent cashout share.
A nearly 4 percent increase from the prior report was clocked for conventional loan inquiries, though conventional business was off by nearly a third from the week ended May 17, 2013.
Next were inquiries for adjustable-rate mortgages, which were up 1.7 percent. ARM activity has soared 112 percent on a year-over-year basis. ARM share was virtually unchanged from the last report at 13.2 percent but has widened considerably from 4.7 percent a year ago.
Pricing inquiries for jumbo mortgages increased 1.5 percent and have risen 40 percent over the past year. Jumbo inquiries represented 10.3 percent of the latest week’s activity, slightly thinner than the 10.4 percent share in the prior report. Jumbo share was only 5.6 percent in the year-earlier report.
Interest rates on jumbo mortgages were 7 basis points better than conforming rates, widening from a negative 5-basis-point spread a week earlier and swinging from a positive 26-basis-point spread a year earlier.
Inquiries for loans to finance a home purchase slowed by more than a percent from a week ago but were 18 percent higher than a year ago.
The worst week-over-week performance was delivered by the Federal Housing Administration category, with inquiries for FHA-insured loans declining more than 2 percent. FHAÂ activity was down by nearly a quarter from the same week in 2013.
FHAÂ share fell to 14.8 percent from 15.5 percent and was about the same as 12 months prior.
Helping prop up activity were 30-year fixed rates, which slipped 4 BPS to 4.528 percent. Thirty-year rates were 3.832 percent during the same week last year.
Rates on 15-year mortgages were 99 BPS better than 30-year rates, slightly better than the 98-basis-point spread in the last report and much better than the 78-basis-point spread in the year-earlier report.
Prospective borrowers can expect lower rates in next week’s report based on an analysis of Treasury market activity.
The 10-year Treasury yield averaged 2.57 percent in the week covered by the latest Mortgage Market Index, while the 10-year yield closed at 2.52 percent Friday, according to the Treasury Department. The movement suggests fixed rates could be around 5 BPS better in the next report.
