The one-year adjustable-rate mortgage improved as a growing share of loan applicants are opting for ARMs. An increase in new mortgage applications was fueled by a surge in refinances and record applications for government purchase financing.
There was no weekly change in the average 30-year fixed-rated mortgage, which Freddie Mac reported today at 5.04%. A year earlier, the 30-year stood at 6.09%.
The average 15-year fixed-rate mortgage eased 0.01% from the previous week to 4.46%, according to Freddie’s survey of 125 thrifts, credit unions, commercial banks and mortgage lenders.
In early trading, the 10-year Treasury bond yielded 3.381%, better than 3.443% a week ago and an indication that mortgage rates might ease.
However, more than two-thirds — 69% — of the 10 panelists surveyed by Bankrate.com for the week Sept. 24 to Sept. 30 predicted rates will not move more than 2 basis points during the next 35 to 45 days, while 16% forecasted a decrease and 15% projected a decline.
Freddie said the five-year Treasury-indexed hybrid ARM was unchanged from the prior week at 4.51%.
But the one-year Treasury-indexed ARM saw some action — falling 6 BPS to 4.52%, according to Freddie’s survey. The one-year was down 51 BPS from a year ago. The underlying index, the yield on the one-year Treasury bill, was 0.41% yesterday, higher than 0.38% seven days prior, according to Federal Reserve data.
Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.67% yesterday, edging down from 0.68% last week, according to Bankrate.com.
Freddie’s chief economist, Frank Nothaft, noted that yesterday’s statement indicating the Federal Reserve it would keep its benchmark interest rate exceptionally low for an extended period will likely benefit ARM borrowers.
ARM share jumped from 6.0% to 6.7% in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Sept. 18.
A decline in mortgage rates last week as well as a 17% surge in refinances helped push mortgage applications up 13% on a seasonally adjusted basis, MBA reported. Purchase applications were 6% better, and the Government Purchase Index reached the highest level on record.
MBA said the share of applications that were for refinances was 64%, up from 61% the prior week.
