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| Refinance demand shot up to the highest level since April as rates edged up. But Treasury activity late today points to an upcoming jump in fixed rates.
The 30-year fixed-rate mortgage averaged 6.34%, inching up 3 basis points from a week ago, according to Freddie Mac’s latest survey of mortgage-lending companies, thrifts and commercial banks. The average is 6 BPS lower than a year ago. The 15-year reportedly averaged 5.98%, just 1 BPS higher than last week. This month has seen long-term mortgage rates lingering at levels not seen since May, Freddie noted. But the benchmark for such rates, the 10-year Treasury note yield, experienced a sharp increase — closing up 20 BPS over the week to 4.69%. Almost half the mortgage “experts” surveyed by Bankrate.com this week believe mortgage rates will rise over the next 35 to 45 days, nearly a third think they’ll stay relatively unchanged, and a small minority forecast a downturn. The Mortgage Bankers Association and the National Association of Realtors also see rates rising, although at a different pace. Their respective September forecasts have the 30-year at 6.6% and 6.4% next quarter. Climbing 4 BPS to 6.21% this week was the 5-year Treasury-indexed hybrid adjustable-rate mortgage average, according to Freddie’s survey. The only weekly decrease,1 BPS to 5.65%, occurred in the 1-year Treasury-indexed ARM average, Freddie said. The 1-year Treasury bill yield, however, tumbled 6 BPS from the previous week to 4.06% Wednesday, the Federal Reserve reported. “On Tuesday, the Fed announced a half-percentage-point cut to the Fed funds rate,” Freddie Chief Economist Frank Nothaft commented in an announcement. “In addition to bringing down short-term interest rates, the cut should also dissipate some of the volatility in short-term interest rates we observed earlier. The ARM share of total mortgage applications retreated from a slight increase and fell below 13% during the week ending Sept. 14, according to the Mortgage Bankers Association’s latest Weekly Mortgage Application Survey, which runs one week behind Freddie’s survey. Nonetheless, overall mortgage application activity continued to improve, with volume edging up 2 percent over the previous week due to a 5 percent boost in refinance requests and a slight increase in purchase money demand, MBA said. The refinance share of applications inched up from 42% a week earlier to 44% — reportedly the highest rate since April. |
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