In the first week following the historic Brexit vote, new mortgage refinance activity soared to the highest level in more than four months as rates plunged.
A 19 percent rise from one week prior left the U.S. Mortgage Market Index from OpenClose and Mortgage Daily for the week ended July 1 at 187.
The index, which is determined based on average per-user rate locks by clients of OpenClose,
soared 26 percent compared to the same week last year.
Driving the impressive gains was refinance activity, with the Refinance MMI shooting
up 37 percent from the week ended June 24 to 145 — the highest level since the week ended Feb. 26, when it was 151. Refinance activity was a stunning 75 percent higher than in the year-prior report.
Refinance share, meanwhile, was 77.6 percent — the widest it’s been since it was 86.8 percent in the week ended Feb. 26. The share was 67.6 percent a week earlier and 55.9 percent a year earlier. This week’s share consisted of a 50.0 percent rate-term share and a 27.6 percent cashout share.
Rate locks for conventional mortgages increased 21 percent from the prior-week report and were up 26 percent from the week ended July 3, 2015.
A 15 percent week-over-week gain was recorded for Federal Housing Administration rate locks, while the category was up 27 percent on a year-over-year basis. FHA share thinned to 24.3 percent from 25.2 percent but was minimally wider than 24.2 percent a year ago.
Up next were rate locks for purchase financing, which rose 9 percent from the last report and from the year-earlier report.
As fixed mortgage rates sank, so did rate locks for adjustable-rate mortgages — by a quarter from the prior week and by 36 percent from 12 months prior. ARM share was slashed to 5.7 percent from 9.1 percent a week previous and 11.3 percent a year previous.
Jumbo was the worst-performing category, with rate locks sinking 40 percent on a week-over-week basis and plummeting 58 percent on a year-over-year basis. Jumbo share tumbled to 3.9 percent from 7.8 percent in the prior report and 11.7 percent in the year-prior report.
Interest rates on jumbo loans were a basis point lower than conforming rates. The spread swung from a positive 7 BPS last week but thinned from a negative 13 BPS this week last year.
At 3.48 percent, conforming 30-year fixed rates were down 8 BPS for the week and 60 BPS better than the same week in 2015. Bond yields and mortgage rates sank this past week on uncertainty in the market resulting from the United Kingdom’s vote to abandon the European Union.
The spread between 15- and 30-year rates was 70 BPS, more narrow than 73 BPS in the last report. Fifteen-year rates were 84 BPS lower than 30-year rates 12 months ago.
Rates are likely to be approximately 4 BPS lower in the next Mortgage Market Index report based on a Mortgage Daily analysis of Treasury market activity.
