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Jumbo Leads Decline in Weekly Mortgage Activity

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With jumbo business leading the way, new mortgage activity tumbled following the spectacular improvement registered the previous week. An increase in jumbo rates outpaced the increase in conforming rates.

The U.S. Mortgage Market Index from LoanSifter/Optimal Blue and Mortgage Daily landed at 205 for the week ended Oct. 24.

The index, a reflection of average per-user pricing inquires by LoanSifter clients, fell 15 percent from the prior week — when activity had soared 30 percent.

But business escalated 8 percent from the same week in the prior year.

Out front of the week-over-week decline were inquiries for jumbo mortgages, tumbling 23 percent from the week ended Oct. 17. Compared to the same week last year, however, the jumbo index was up 45 percent — the biggest year-over-year gain of any category.

Jumbo share fell to 10.7 percent from 11.8 percent but was far wider than 7.9 percent one year earlier.

Interest rates on jumbo mortgages were 3 basis point higher than conforming rates, reversing course from last week when jumbo rates were 5 BPS better than their conforming counterparts. At the same point in 2013, the jumbo-conforming spread was far wider at 29 BPS.

Next were inquiries for refinances, which fell 20 percent for the week. But refinance activity stood 19 percent higher than in the week ended Oct. 25, 2014.

Refinance share was cut to 58.9 percent from 62.2 percent seven days earlier but widened from 53.3 percent one year prior. The most-recent share reflected a 42.4 percent rate-term share and a 16.5 percent cashout share.

Up next were inquiries for adjustable-rate mortgages — dropping 18 percent from the previous report but 17 percent better than the year-earlier report. ARM share fell to 11.7 percent from 12.1 percent but fattened from 10.7 percent 12 months earlier.

Conventional activity slowed 17 percent and was up 3 percent from the same week in 2013.

An 8 percent decline was recorded for purchase inquiries, while the category was off 5 percent from a year previous.

The smallest week-over-week decline, 1 percent, was with inquiries for loans insured by the Federal Housing Administration. FHA business slowed 4 percent from the year-earlier report.

FHA share jumped to 13.2 percent from 11.3 percent but fell from 14.8 percent a year prior.

Overall new activity slowed as interest rates bounced off their recent lows reached last week, with 30-year fixed rates averaging 4.310 percent versus 4.285 percent in the prior report. The 30 year was 4.407 percent a year prior.

A 93-basis-point discount from 30-year loans was quoted for 15-year rates, more than the prior week’s 91 BPS. The spread between short- and long-term rates was 90 BPS at the same point last year.

Fixed rates are likely to be around 4 BPS higher in the next report based on the week’s Treasury market activity. The 10-year Treasury yield averaged 2.25 percent during the week covered by the Mortgage Market Index report, while it closed Friday at 2.29 percent based on Treasury Department data.

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