Fixed Rates Decrease, ARMs Increase

The 30-year fixed rate mortgage averaged 6.45%, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending Aug. 30 announced today. The 30-year was down seven basis points from the prior week and 1 BPS higher than the prior year.

The average 15-year fixed rate mortgage was 6.12% — down 6 BPS for the week, Freddie reported.

The yield on the 10-year Treasury, which is closely tracked by fixed mortgage rates, was 4.52% near midday, about 11 BPS lower than a week earlier and off 4 BPS for the day.

Over three-quarters of the mortgage bankers, mortgage brokers and other “industry experts” surveyed by Bankrate.com for the week ending Sept. 5 expect rates to fall further while the rest forecast no change.

The 5-year hybrid adjustable-rate mortgage averaged 6.35%, rising from 1 BPS from a week earlier, the survey said.

The 1-year Treasury-indexed ARM averaged 5.84% — soaring 24 BPS from the previous week, according to Freddie’s data.

“The increase in ARM rates is consistent with movement of the yields on short-term Treasury securities, which have exhibited higher volatility recently due to market uncertainties,” Freddie Chief Economist Frank Nothaft said in the statement.

On Tuesday, the yield on the 1-year Treasury was 4.36%, up 29 BPS from a week earlier, according to Federal Reserve data.

ARM activity represented just 15% of total loan applications reported in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug. 24, falling from 18.6% the prior week. ARM share had been as high as 23% during the prior month.

MBA said overall 1003 activity was down 4% from the prior week. Government applications were the only loan type to see a weekly increase — albeit only an 0.1% rise.

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

e-mail: mtgsam@aol.com