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| As loan applications and the share of refinance activity climbed, mortgage rates tumbled — though they are forecasted to rise.
The 30-year fixed-rate mortgage average stepped down 7 basis points within the past week to 6.26%, the lowest it has been at since mid-May, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending today. A year ago, the average was 6.31%. The 15-year averaged 5.91%, falling 8 BPS from last week, Freddie said. The benchmark for long-term mortgage rates, the 10-year Treasury note yield, was at 4.35% this afternoon, off 12 BPS for the day and 3 BPS from last week. The yield’s downturn follows the Federal Open Market Committee’s announcement yesterday that it cut the federal funds rate target by 25 BPS to 4.5% in anticipation of rate of economic expansion likely slowing in the near term, partly due to the intensity of the housing correction. “October’s consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months,” said Frank Nothaft, Freddie Mac’s chief economist. “Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks.” Over the next month and a half, however, half of the 100 mortgage industry brokers, bankers and individuals surveyed by Bankrate.com this week forecast mortgage rates will rise, while the rest were evenly split among those who predict a downturn and those who think they’ll stay relatively unchanged. Fannie Mae’s latest forecast has the 30-year averaging 6.45% this quarter and going past 6.50% until the third quarter, while the Mortgage Bankers Association sees this quarter’s average at 6.5% surging to 6.8% in the third quarter. The 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly came in at 5.98%, 5 BPS lower than a week ago. Sliding 9 BPS from last week, the 1-year Treasury-indexed ARM averaged 5.57%, Freddie reported. The 1-year Treasury bill itself yield slipped 3 BPS within a week to 3.98% Tuesday, Federal Reserve data showed. The ARM share of total mortgage applications edged up from the previous week to nearly 15%, according to the Mortgage Bankers Association’s application survey for the week ending Oct. 26. A 9% boost in refinance requests pushed overall mortgage application 4% higher than the level in the prior week, as purchase money demand weakened 1%, MBA said. Half of all mortgage applications were for refinance, reportedly growing from 47% a week earlier. |
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