Purchase Financing Down 19% Past 12 Months

The U.S. Mortgage Market Index was 252 this week. The measure was weaker than 273 in the week ended last Friday.

The index is based on the average number of pricing inquiries pulled by clients of Mortech Inc., which sponsors the report along with Mortgage Daily.

The slide from last week was led by declining purchase transactions, which fell 10 percent from the previous week.

Refinances were down 7 percent, but the refinance share crept up to 67 percent from two-thirds last week. Rate-term share fattened to 54 percent from 52 percent in the prior report, and cashout share was cut to 13 percent from 14 percent.

Adjustable-rate mortgage activity was down 11 percent. ARM share wasn’t much changed from the last report at 6.71 percent.

Conventional loans and loans insured by the Federal Housing Administration each saw an 8 percent week-over-week decline, while the drop inched down to 7 percent for refinances.

There hasn’t been much change in the Mortgage Market Index since the week ended Sept. 8, 2010, when the index stood at 259.

But when you drill down to purchases, activity has fallen nearly a fifth. At the same time, refinance transactions have climbed 8 percent since this point last year.

While the Labor Day holiday took its toll on new business, the conforming 30-year fixed-rate mortgage improved 10 BPS from last week to 4.24 percent.

The jumbo-conforming spread thinned slightly to 62 BPS from 63 BPS, making the premium for larger loans less expensive.

The spread between the conforming 15- and 30-year loans fell to 81 BPS from last Friday’s 86 BPS. The smaller spread provides prospective borrowers with less incentive to choose a 15 year mortgage.

Compared to the close of the market last Friday, the yield on the 10-year Treasury was down 9 BPS to 1.93 percent today, Treasury Department data indicate. Given the 10-basis-point decline in mortgage rates during the same period, rates look likely to come in next week not much different than this week’s levels.