The 30-year fixed rate fell to the lowest level since May and might fall further. Meanwhile, borrowers have shied away from adjustable rates and purchase activity.
Falling 10 basis points from last week, the average 30-year fixed-rate mortgage was 4.94% in Freddie Mac’s Primary Mortgage Market Survey for the week ended today. The 30-year was 116 BPS better than a year earlier.
Freddie said the 30-year was at is lowest level since the week ended May 28, when it stood at 4.91%.
In its monthly rate report, Freddie’s regulator — the Federal Housing Finance Agency — said the 30-year eased 0.01% from July to 5.30% in August.
Fixed rates have further to fall based on the 10-year Treasury bond yield, which fell to 3.232% today from 3.381% during trading a week earlier.
But less than one-third of the 100 panelists surveyed by Bankrate.com for the week Oct. 1 to Oct. 7 agreed — with half predicting rates with stay within 2 BPS of their current levels during the next 35 to 45 days and 21% expecting an increase.
At 4.36%, the average 15-year fixed-rate mortgage was also 10 BPS lower than Freddie’s survey last week. FHFA said the 15-year rose 3 BPS from July to 4.92% in August.
Freddie reported that the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.42%, down 0.09% from the previous week.
But the one-year Treasury-indexed ARM was off only 3 BPS to 4.49%. Still, the one-year was 63 BPS lower than a year earlier.
The underlying index for the one-year ARM, the yield on the one-year Treasury bill, eased one basis point from a week earlier to 0.40%, according to data reported by the U.S. Department of the Treasury.
A widely used subprime ARM index, the six-month London Interbank Offered Rate, was 0.63% yesterday, Bankrate.com reported. LIBORÂ was 0.67% seven days earlier.
Attractively low fixed rates helped convince some borrowers to avoid ARMs, with the adjustable-rate share of applications tracked in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Sept. 25 falling to 6.2% from the previous week’s 6.7%.
A 6% decline in purchase applications dragged MBA’s Market Composite Index down 3% on a seasonally adjusted basis.
Refinances, however, edged up 1% from the prior week, pushing the refinance share of applications to 65% from 64%.
