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| Traffic at mortgage shops inched up as unexpected economic data finally pushed long-term rates down to a level they are expected to linger at.
The 30-year fixed-rate mortgage averaged 5.80%, down nine basis points from last week and one BPS below the level a year ago, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The latest forecast by the Mortgage Bankers Association has the 30-year averaging near 5.80% for the current quarter, ending the year at 5.9% and climbing to 6.1% early 2006. The averages resemble those in Freddie’s updated outlook, with the only difference being that Freddie sees the 30-year reaching 6.0% before the new year. In line with those predictions, half of the 100 mortgage “experts” surveyed by Bankrate.com this week believe rates will remain unchanged over the next 35 to 45 days, while one-third expect a rise and the rest anticipate a downturn over that time. Falling seven BPS within the past seven days, Freddie said the average for the 15-year came in at 5.40 percent. Late Thursday, the 10-year Treasury note yielded 4.20% and was priced at 100.38, better than 4.32% and 98.44 at the market’s close a week ago. The 5-year Treasury-indexed hybrid adjustable-rate mortgage reportedly averaged 5.34 percent, six BPS lower than last week. “Mortgage rates can fluctuate from week to week depending on market conditions and expectations,” said Freddie chief economist Frank Nothaft in a written statement. “That is probably what happened this week. Although economic indicators of late have been positive, they were not quite what the market had been expecting.“ The only increase during the week was in the average for the 1-year Treasury-indexed ARM, although it was just by one BPS to 4.58%. The rate moved in the opposite direction of its index, the 1-year T-bill, which at 3.88% as of Tuesday decreased two BPS from a week earlier. After three weeks of falling activity, the volume of 1003s improved 2%, according to MBA’s Weekly Mortgage Applications Survey for the week ending Aug. 12. Compared to a year ago, the overall number of applications is reportedly up nearly 11%, while the dollar volume is up 26%. The weekly improvement was due to borrowers looking to refinance, as refinance application activity increased 5% from the previous week and purchase money loan requests barely edged up, MBA said. The refi share of total applications reportedly inched up from the prior week to 42% and the ARM share nudged down to 29%. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. E-mail: [email protected]
