Mortgage rates reached record lows and refinances rebounded.
Down 0.13% from last week, the average 30-year fixed-rate mortgage was 4.85% in Freddie Mac’s survey of 125 thrifts, commercial banks and mortgage lenders released today. A year ago, the 30-year stood at 5.85%.
“The 30-year fixed-rate mortgage has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971,” the report said.
Freddie’s chief economist, Frank Nothaft, explained that the Federal Reserve’s plan announced last week to purchase Treasury securities over the next six months dragged bond yields and mortgage rates lower.
Freddie’s regulator, the Federal Housing Finance Agency, reported today that the average 30-year fixed-rate was 5.03% in February, down from 5.09% in January. That survey was calculated using rates on loans closed during the last week of the month.
The average 15-year fixed-rate mortgage was down a more moderate 3 basis points from last week to 4.58%, Freddie reported. The disparate drop cut the spread between the 15- and 30-year to just 27 BPS from last week’s 37 BPS.
The FHFA’s report indicated that the 15-year fell 19 basis points from January to 4.92% in February.
Following a 38 basis point decline last week, the yield on the 10-year Treasury climbed 27 BPS back up to yield 2.794% around midday. Investors have grown cautious of Treasurys as the Obama administration plans to finance a massive budget deficit.
Half of the hundred panelists surveyed by Bankrate.com for the week March 26 to April 1 expect mortgage rates to rise at least 3 BPS during the next 35 to 45 days, while the rest were split over whether rates will decline or see no change.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.96%, off 2 BPS, according to Freddie.
Slipping 6 BPS, the one-year Treasury-indexed ARM averaged 4.85% in Freddie’s survey, Freddie said. The yield on the underlying index, the 1-year Treasury, was 0.60% yesterday, unchanged from seven days earlier, data reported by the U.S. Treasury Department indicated.
The six-month London Interbank Offered Rate was 1.77% yesterday, according to Bankrate.com. LIBOR, a popular ARM index for subprime loans, was 1.88% last week.
ARM share slipped to 1% from 2% the prior week, the Mortgage Bankers Association said in its survey of mortgage bankers, commercial banks and thrifts for the week ending March 20.
But overall application activity was 32% higher on a seasonally adjusted basis, pushing MBA’s Market Composite Index to 1159.4.
Refinances drove the latest activity, rising 42%, according to MBA. The share of total applications that were for refinances increased to 79% from 73%.
Purchase applications were 4% higher and government 1003s were up 5%.
