As interest rates on residential loans turned lower, new refinance activity surged to the highest level in 17 months — driving up overall activity in the process.
A 14 percent increase from a week earlier put the U.S. Mortgage Market Index from OpenClose and Mortgage Daily for the week ended Aug. 5 at 199.
Compared to the same week last year, the index — a representation of average per-user rate locks by customers of OpenClose — has risen by 37 percent.
Out front of the week-over-week gain were rate locks for jumbo mortgages, which leapt by more than a quarter. Jumbo business, though, declined 16 percent from the week ended Aug. 7, 2015.
Jumbo share widened to 9.6 percent from 8.7 percent but was far thinner than 15.7 percent this week in 2015.
The jumbo-conforming spread thinned to 11 basis points from 15 BPS but did a wide swing from the same period last year, when interest rates on jumbo mortgages were 14 BPS lower than conforming rates.
A 19 percent increase from the week ended July 29, 2016, was recorded for the Government MMI.
Government share was 31.7 percent in the latest report, widening from 30.3 percent a week earlier. This week’s share was comprised of a 23.8 percent share for mortgages insured by the Federal Housing Administration and a 7.9 percent share for loans guaranteed by the Department of Veterans Affairs.
The Refinance MMI was 83 in the most-recent report — the highest level since the week ended Feb. 6, 2015, when it was 95. Refinance activity increased 19 percent from the prior week and soared 105 percent from the revised level a year prior.
Refinance
share was 41.9 percent, wider than 40.1 percent the previous week and the revised 28.1 percent the same week the previous year. The most-recent figure consisted of a 29.7 percent rate-term share and a 12.2 percent cashout share.
Conventional business improved by 12 percent over the last report.
An 11 percent week-over-week and year-over-year increase was recorded for purchase financing business. The level from one year ago was revised.
The worst-performing category was adjustable-rate mortgages, with the volume of ARM rate locks falling 12 percent from the report seven days earlier and tumbling 23 percent from the report 12 months earlier — the worst year-over-year performance.
ARM share
fell to 5.5 percent from 7.1 percent and was much thinner than 9.8 percent a year ago.
Thirty-year fixed conforming rates were 3.43 percent, improving 5 BPS for the week and 48 BPS better than the same week last year.
Fifteen-year rates were 69 BPS lower than 30-year rates. The spread was 70 BPS in the last report and 78 BPS in the report from the same week in 2015.
A Mortgage Daily analysis of Treasury market activity points to a potential increase of around 5 BPS in fixed rates in the next Mortgage Market Index report. The deterioration reflects today’s strong employment report.
