|
|
While fewer loan applications were completed, the latest measure of mortgage activity indicated an even bigger decline in ARM applications — which fell to their lowest level in over a year. Meanwhile, slowly rising rates are expected to remain tame.
The average 30-year fixed-rate mortgage came in at 5.66%, up four basis points from last week, according to Freddie Mac’s latest Primary Mortgage Market Survey. Last year at this time, the 30-year average was at 6.00%. The 15-year average went up by five BPS to 5.25% this week, Freddie said. Fixed rates followed the 10-year Treasury index note up, which yielded 4.17% with a price of 99.56 late Thursday, way worse than 4.03% and 100.69 a week ago. “Over the past few weeks, financial markets have been gearing up for greater growth in the economy, which ultimately leads to higher inflation rates,” commented Freddie chief economist Frank Nothaft in the announcement. “As a result, mortgage rates increased for the second straight week.” Rates will hover around their current levels for some time, according to the Mortgage Bankers Association’s latest long-term forecast, which has the 30-year averaging 5.7% next quarter, reaching 6% until the second quarter next year, and increasing to 6.3% at the end of 2007. A majority — 80% — of Bankrate.com’s surveyed panel of mortgage “experts” believed rates would stay about the same in the next 35 to 45 days, while the rest said rates would drop over that time. The only decrease during the past week reportedly occurred with the 5-year Treasury-indexed hybrid adjustable-rate mortgage — down four BPS to 5.15%. Meanwhile, Freddie reported that the biggest weekly upturn was seen in the 1-year Treasury-indexed ARM — up six BPS to 4.39%. The 1-year T-bill index, used to price roughly half of all ARMs, was 3.59% Tuesday, moving up four BPS from a week earlier, according to the Federal Reserve. Over the shortened holiday week the share of ARM applications fell to 28% — the lowest level since March 2004, MBAs latest Weekly Mortgage Applications Survey said. While overall applications were off 7% for the week, ARM applications were down 16%, Michael Cevarr, MBAs director of member surveys, said in the statement. Purchase money applications fell 6%, according to MBA, less than the 8% slowdown in refinance requests. The refinance share of mortgage activity edged down from a week earlier to 45%, MBA said. |
|
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]