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| Refinance applications headed higher as purchase activity fell and mortgage rates worsened.
The average 30-year fixed rate was 5.68%, according to Freddie Mac’s weekly survey announced today. The 30-year climbed 20 basis points from a week earlier, though is was 66 BPS better than a year earlier. The 15-year fixed rate averaged 5.17%, 22 BPS higher than the prior week, Freddie reported. The benchmark for fixed rates, the 10-year Treasury, yielded 3.63% in early afternoon trading, unchanged from last week, according to CNNMoney. Nearly 60% of those surveyed by Bankrate.com project rates will increase further during the next 45 days, while one-quarter forecast a downturn. For the second time in two weeks, the Federal Open Market Committee reduced the federal funds rate — this time by 50 BPS to 3.0%. The committee also lowered the discount rate 50 BPS, leaving it at 3.5%. “Financial markets remain under considerable stress, and credit has tightened further for some businesses and households,” the Fed explained in its announcement. “Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.” Freddie’s chief economist, Frank Nothaft, noted the move was anticipated by the markets. The average 5-year Treasury-indexed adjustable-rate mortgage was 5.32%, climbing 0.19% from the prior week, according to Freddie’s survey. The 1-year Treasury-indexed ARM averaged 5.05%, up slightly from 4.99% a week earlier. The 1-year Treasury itself yielded 2.30% yesterday, up from 2.19% seven days prior, U.S. Treasury Department data indicated. Another ARM index, the 6-month LIBOR, was 3.18%, falling from 3.49% a week earlier, according to Bankrate.com. ARM applications accounted for 8.6% of activity reported in the Mortgage Bankers Association application survey for the week ended Jan. 25, down from 9.3% a week earlier. MBA said total loan applications, driven by a 22% surge in refinance activity, were 8% higher than the prior week. Purchase applications fell 18%. Refinances accounted for 73% of applications, climbing from 66% in MBA’s prior weekly survey. |
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Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com. e-mail:Â mtgsam@aol.com |
