Subsiding mortgage rates lured refinance prospects back into the market. Interest rates on jumbo mortgages were more improved than on conforming loans.
It was the highest level since the week ended Aug. 8 for the U.S. Mortgage Market Index from LoanSifter/Optimal Blue and Mortgage Daily, which finished the week ended Sept. 26 at 172.5.
The index, a representation of average per-user pricing inquiries by LoanSifter clients, grew by 7 percent over the prior week but was down 6 percent from the same week last year.
Lifting overall activity were inquiries for refinances, which shot up 13 percent from the week ended Sept. 26 but, like the overall market, slipped 6 percent from a year earlier.
Refinance share was fatter at 51.2 percent versus 48.4 percent in the prior report. The share, however, was off from 51.3 percent one year prior. The most recent share reflected a 34.2 percent rate-term share and a 17.0 percent cashout share.
Also riding high were adjustable-rate mortgages, with ARM inquiries climbing 11 percent. ARM activity improved 18 percent from the week ended Oct. 4, 2013. ARM share widened to 12.3 percent from 11.9 percent and was just 9.8 percent one year prior.
Conventional business rose 9 percent but was off by 13 percent from the year-earlier report.
Up nearly 9 percent were pricing inquiries for jumbo mortgages. Jumbo activity has risen by nearly half compared to the same week in 2013. Jumbo share widened to 11.9 percent from 11.7 percent seven days earlier and only 7.6 percent twelve months earlier.
Jumbo business outpaced conforming activity as interest rates on jumbo mortgages were 12 basis points better than on conforming loans. The negative jumbo-conforming spread was just 4 BPS in the last report.
Jumbo borrowers in the year-earlier report, however, were paying rates that were 31 BPS higher than conforming rates — more normalized market conditions.
Purchase financing activity inched up less than a percent from seven days prior and was down 6 percent from the same week last year.
A less-than-1-percent decline was recorded for Federal Housing Administration inquiries, the only category to go south. FHA business has fallen 10 percent versus a year previous. FHAÂ share declined to 14.6 percent from 15.6 percent in the prior report and 15.2 percent in the year-previous report.
Conforming 30-year fixed rates averaged 4.485 percent, about 4 BPS better than in the prior report. Thirty-year rates were 2 BPS lower than one year prior.
The improvement in rates might have been even better had it not been for a strong September employment report, which indicated that U.S. nonfarm payrolls increased by a robust 248,000 and the unemployment rate fell to 5.9 percent — the lowest it has been since July 2008.
Borrowers who inquired about 15-year mortgages were quoted an average rate that was 90 BPS better than 30-year borrowers, about the same spread as in the previous report and the report from a year earlier.
Not much change can be expected for fixed rates in the next Mortgage Market Index report based on an analysis of Department of the Treasury data.
According to the data, the yield on the 10-year Treasury note — which is tracked by fixed mortgage rates — averaged 2.47 percent during the period represented in the latest Mortgage Market Index report. The 10-year yield closed Friday at 2.45 percent.
However, third-quarter earnings seasons surprises could have an impact on Treasury yields and mortgage rates.
