Despite deterioration in interest rates and the upcoming holiday weekend, home loan originators picked up the pace this week thanks to a bump in refinance activity.
The U.S. Mortgage Market Index from OpenClose and Mortgage Daily, an indication of upcoming loan production, closed out the week ended Sept. 2 at 171.
The index, which is based on average per-user rate locks from OpenClose clients through the seven days ended Thursday at midnight, rose a percent from a week earlier.
Compared to a year earlier, the MMI, which is not adjusted for seasonal variations, has increased by more than a third.
The biggest gain from the week ended Aug. 26, 2016, was with rate locks for adjustable-rate mortgages: nearly a third. ARM activity has retreated, though, by 19 percent from the same week last year.
ARM share was 6.5 percent in the latest report, widening from 5.0 percent a week earlier but thinning from 10.8 percent a year earlier.
Rate locks for jumbo mortgages ascended a quarter in the most-recent week and were up 17 percent from the week ended Sept. 4, 2015. Jumbo share was 10.9 percent, thicker than 8.9 percent the prior week but thinner than 12.4 percent a year prior.
Jumbo interest rates were 2 basis points more than conforming rates. The jumbo-conforming spread fell from 7 BPS a week earlier and swung from a negative 20 BPS a year earlier.
Refinance business improved 7 percent on a week-over-week basis and soared 79 percent from the revised level a year ago — the biggest year-over-year improvement.
Refinance rate locks tend to rise as prospective borrowers fear an upcoming increase in rates.
Refinance share was 42.5 percent, fatter than 40.1 percent one week previous and the revised 31.8 percent one year previous. This week’s refinance share was made up of a 26.3 percent rate-term share and a 16.2 percent cashout share — the widest cashout share since it was
16.9 percent in the week ended Feb. 19.
Conventional mortgage rate locks rose 3 percent from the last report.
A nearly 3 percent decline from the report released seven days earlier was recorded for purchase rate locks, though the category improved 13 percent from the revised level a year earlier.
The Government MMI declined 3 percent from the prior week to 50. Government share slipped to 29.1 percent from 30.5 percent one week prior. This week’s government share consisted of a 21.6 percent FHA share and a 7.5 percent VA share.
The average 30-year conforming fixed rate was 3.46 percent, worsening 3 BPS from the previous week but 43 BPS better than a year previous.
The spread between 15- and 30-year rates was unchanged at 69 BPS, though it was more narrow than 80 BPS this week in 2015.
Mortgage rates are unlikely to be much different in the next Mortgage Market Index report, maybe around 3 BPS higher, based on a Mortgage Daily analysis of Treasury market activity.
