Falling mortgage rates motivated an increasing number of borrowers this week to inquire about refinance, though inquiries for purchases were also higher. Rates, however, are poised to deteriorate. Refinance activity more than doubled compared to a year ago. Despite a widening spread over conforming rates, more jumbo borrowers were out shopping for a loan.
The number of prospective borrowers who inquired about a mortgage rose 4 percent from last week, leaving the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the seven days ended Feb. 3 at 270.
The index was 48 percent higher than the week ended Feb. 2, 2011.
Behind the strong weekly performance were refinances, which increased 6 percent from a week earlier and were 110 percent higher than a year earlier.
Refinance share came in at 73 percent, nudging up from 72 percent in last week’s report. Refinance share was just 51 percent during the same week last year. This week’s share reflected a 60 percent rate-term share and a 13 percent cashout share.
Purchase inquires were mostly unchanged from last week but fell 17 percent from a year ago.
Jumbo loan inquiries increased 4 percent over the past seven days. Jumbo share inched up to 8.90 percent from 8.83 percent.
Adjustable-rate mortgage activity was the same as last week, but ARMÂ share slipped to 4.31 percent from 4.49 percent.
Inquiries for loans insured by the Federal Housing Administration were unchanged from the previous week even as FHAÂ share drifted down to 11.22 percent from 11.59 percent in the prior report.
Conventional loan inquiries were up 5 percent for the week.
Fueling this week’s improved business were falling mortgage rates.
The average 30-year, fixed-rate, conforming mortgage was 3.972 percent, down from 4.098 percent a week earlier and 4.951 percent a year earlier.
Jumbo mortgages were priced 62 basis points higher than conforming loans, worse than 60 BPS last week. But the jumbo-conforming spread improved from 70Â BPS in the same week last year.
Rates for 15-year borrowers were 74 BPS better than 30-year rates. The spread was 72 BPS last week, but no change has occurred from a year ago.
An analysis of this week’s Treasury market activity suggests rates could be nearly 10Â BPS higher in next week’s report. The yield on the 10-year Treasury averaged 1.88 percent this week, while it closed at 1.97 percent today, according to the Department of the Treasury.
