Refis Rise, Rates Tumble

The 30-year fixed-rate mortgage averaged 6.26% for the week ending July 17, according to Freddie Mac’s survey of thrifts, commercial banks and mortgage lending companies for the week ending July 17. The 30-year fell from 6.37% a week earlier and was 47 basis points lower than the same week last year.

A bigger decline was reported for the 15-year fixed-rate mortgage, which fell to 5.78% from 5.91% the previous week.

“Mortgage rates fell this week amid market speculation that the Federal Reserve may not raise the overnight bank-lending rate this year after all,” Freddie Chief Economist Frank Nothaft explained in the report. “Some of the factors motivating the change in market perceptions this week included retail sales for June rising at the slowest pace since February and consumer sentiment in July holding at low levels not seen since 1980.”

The 10-year Treasury yield, which fixed-mortgage rates tend to move in tandem with, was 3.97% today, slightly lower than 3.80% seven days earlier, according to CNNMoney.

Of 100 panelists surveyed for the week July 17 to July 23 by Bankrate.com, 70 expect rates to fall, while the rest were evenly split over whether rates would rise or stay within 2 BPS of their current levels over the next 35 to 45 days.

Freddie said the hybrid Treasury-indexed 5-year adjustable-rate mortgage averaged 5.80% this week, edging lower from 5.82% the previous week.

The average 1-year Treasury-indexed ARM was 5.10%, down 7 BPS from the prior week. The yield on the 1-year Treasury itself was 2.16% Wednesday, falling from 2.21% a week earlier.

Another ARM index, the 6-month London Interbank Offered Rate, was 3.09% as of July 16, Bankrate.com reported. LIBOR stood at 3.10% the prior week.

ARMs accounted for 9% of applications tracked in the Mortgage Bankers Association survey of mortgage bankers, commercial banks and thrifts for the week ending July 11. ARM share fell from 10% in the previous week’s survey.

MBA said overall applications rose 2% on a seasonally adjusted basis during the latest week, bringing the Market Composite Index to 522.2. While purchase applications actually decreased 2%, refinance activity increased 7%, bringing the refinance share to 39% from 37% in last week’s survey.

Government loan applications were 8% lower during the latest week, MBA reported.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com