The Mortgage Bankers Association reported Wednesday that the spread between jumbo mortgages, for balances in excess of $417,500 and those of conforming loans, with lower balances, shrunk last week as mortgage activity declined.
The spread between jumbo rates and conforming loans is now 0.23 percent. The previous week, it was 0.30 percent.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.50 percent from 3.47 percent, the MBA said in its weekly update on the market.
Jumbo loans went the other direction, at a time when banks are stepping up their efforts to land wealthier clients and reduce risk.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances decreased to 3.73 percent, the lowest rate in the history of the survey, from 3.77 percent.
Meanwhile overall mortgage application activity plummeted, falling more than 12 percent, with both refinancing and purchase loan applications both down significantly.