The 15-year fixed rate fell to its lowest level on record, while the 30-year hovers near its all-time low. Loan applications for home purchases, however, fell to the lowest level in more than a decade.
The average 30-year fixed-rate mortgage dropped 8 basis points from last week to 4.83% in today’s Primary Mortgage Market Survey from Freddie Mac. It was the lowest point for the 30-year since the week ended May 21 — when it averaged 4.82%. A year earlier, the 30-year was 6.04%.
The average 15-year fixed-rate mortgage was 4.32%, also 8 BPS better than Freddie’s prior survey. It was a record low for the shorter-term mortgage based on data back to 1991.
The yield on the 10-year Treasury bond, a barometer for fixed mortgage rates, was 3.353% in late trading, according to WSJ.com. Seven days ago the 10-year yield closed at 3.45%, based on U.S. Treasury Department data. The movement suggests rates might stay put in next week’s survey from Freddie.
A majority of the 100 panelists surveyed by Bankrate.com for the week Nov. 19 to Nov. 25 agreed, predicting that rates will remain within 3 BPS of their current levels during the next 35 to 45 days. An increase was projected by 45%, and none forecasted a decline.
Fannie Mae projected in its November housing forecast that fixed rates will average 5.05% during the fourth quarter then slowly rise to 5.57% over the next year.
Down a whopping 10 BPS from the prior week, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.25%, according to Freddie’s survey.
But the biggest decline was with the one-year Treasury-indexed ARM — which fell 0.12% to 4.35%, Freddie said. During the same week last year, the one-year averaged 5.29%. Fannie forecasted that the one-year will average 4.60% this quarter then climb to 5.08 by the fourth-quarter 2010.
The yield on the one-year Treasury bill, which serves as the index on one-year ARMs, closed yesterday at 0.29%, lower than 0.33% a week earlier. A widely used index on subprime ARMs, the six-month London Interbank Offered Rate, was 0.51% yesterday, Bankrate.com reported. LIBORÂ was 0.54% a week earlier.
Reflecting last week’s smaller decline in the one-year ARM than with fixed rates, ARM share eased to 5.4% in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Nov. 13 from 5.5 percent the previous week. Fannie expects ARM share of applications will average 7% during the current quarter then rise to 9% by the third-quarter 2010.
MBA said prospective loan applicants completed 3% fewer applications on a seasonally adjusted basis than in the prior week, reflecting an 8% decline in purchase activity. Purchase traffic has fallen for six consecutive weeks and is at its lowest level since November 1997. Fannie projected that total home sales will ease slightly from the third quarter to 5.7 million units during the current quarter then climb to 6.1 million units by the end of next year.
Refinance applications were off 1% in MBA’s survey, but the refinance share rose to 73% from 72% the prior week. Refinance share is predicted by Fannie to be 62% in the fourth quarter then fall to 44% by the end of next year.
