Mortgage rates improved, applications for new loans eased and the share of government activity continued to grow. While adjustable-rate mortgages have recently been declining more than their fixed-rate brethren, prospective borrowers showed less interest in ARMs.
Down 6 basis point from last week, the average 30-year fixed-rate mortgage was 5.08% in Freddie Mac’s Primary Mortgage Market Survey for the week ended Sept. 3. The 30-year was 127 BPS better than a year earlier.
At 4 BPS lower than the prior week, the average 15-year fixed-rate mortgage was 4.54%, Freddie said.
Fixed rates are likely to move even lower given the yield on the 10-year Treasury bond, which fell to 3.333% today from 3.440% during trading a week earlier.
Half of the 100 panelists surveyed by Bankrate.com for the week Sept. 3 to Sept. 9 agreed — predicting that mortgage rates will decline at least 3 BPS during the next 35 to 45 days. Another 29 forecasted an increase, while 21 saw no changes ahead.
The biggest decline was with the five-year Treasury-indexed hybrid ARM, which averaged 8 BPS less than last week at 4.59%, according to Freddie.
The one-year Treasury-indexed ARM, which Freddie reported at 4.62%, fell 7 BPS. The one-year averaged 5.15% at the same time last year.
The one-year Treasury bill yield, which is the underlying index on the one-year ARM, closed yesterday at 0.41%, better than 0.45% seven days earlier, according to data from the U.S. Department of the Treasury. The six-month London Interbank Offered Rate — the underlying index for many subprime ARMs — was 0.76% yesterday, Bankrate.com reported. Last week, LIBOR was 0.79%.
Despite a decline in the one-year ARM last week as fixed rates rose, the share of ARM applications fell to 5.6% in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Aug. 28. ARM share was 6.5% the prior week.
MBA reported that a 3% decline in refinance applications pushed its Market Composite Index down 2% on a seasonally adjusted basis. Overall applications were 23% higher, however, than the same week last year. Purchase applications eased 1% — though government purchase applications inched up 1%.
Refinance share was 57% this week, the same as last week, MBA said.
During August, the government share of all applications tracked by MBA was 40%, above 38% the previous month and 32% the previous year.
