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Weekly Refis Rise as Purchase Financing Slips

Mortgage News

A week-over-week decline in purchase financing activity was met by an increase in refinancing business. Interest rates, meanwhile, sank.

With virtually no change from a week earlier, the U.S. Mortgage Market Index from LoanSifter/Optimal Blue and Mortgage Daily was 176 for the week ended Dec. 19.

The index, which represents average per-user pricing inquiries by LoanSifter clients, was up 3 percent versus the same week last year.

The biggest decline from the week ended Dec. 12 was with inquiries for loans insured by the Federal Housing Administration, which fell 7 percent. FHA Business has retreated 28 percent compared to 12 months prior.

FHA share fell to 12.9 percent from 13.9 percent and has thinned substantially from 18.4 percent in the same week a year ago.

Purchase activity fell 5 percent from the previous report and was down by a fifth from the week ended Dec. 20, 2013.

A 2 percent decline from seven days earlier was recorded for adjustable-rate mortgage inquiries, while the category inched up a percent from one year prior. ARM share narrowed to 10.9 percent from 11.1 percent a week earlier and 11.2 percent a year earlier.

Jumbo business crept up 1 percent from the previous week and strengthened 70 percent from the same week in 2013. Jumbo inquiries accounted for 11.3 percent of all activity, edging up from 11.1 in the last report and surging from 6.8 percent in the year-earlier report.

Interest rates on jumbo mortgages were 7 basis points higher than conforming rates, thinning from 8 BPS the previous week. But the jumbo-conforming spread slid from 22 BPS during the same week a year previous.

The strongest performance came from the refinance category, which rose 3 percent for the week. Refinances were up 27 percent over the prior 12 months.

Refinance share was fatter at 60.5 percent compared to 58.5 percent in the previous report. Refinance share also widened from 49.1 percent a year earlier. Last week’s share consisted of a 45.2 percent rate-term share and a 15.4 percent cashout share.

Fixed-rates on conforming 30-year mortgages dropped to 4.205 percent from 4.273 percent and were also better than the 4.767 percent average as of the same point in 2013.

Inquiries for 15-year mortgages yielded rates that were 84 BPS better than on 30-year mortgages. The spread was slightly larger than 83 BPS seven days earlier but not as good as 99 BPS 12 months earlier.

Fixed rates could increase around 3 BPS in the next Mortgage Market Index report based on Mortgage Daily’s analysis of weekly Treasury market activity.

Department of the Treasury data indicate that the 10-year Treasury note yield, which is a benchmark for fixed mortgage rates, averaged 2.14 percent for the week covered by the index and closed at 2.17 percent Friday.

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