Fixed mortgage rates have fallen to the lowest level on record — though they might not stay there for long. Still, fewer new loan applications are being completed.
In its Primary Mortgage Market Survey for the week ended Dec. 3, Freddie Mac reported that the average 30-year fixed-rate mortgage declined for the fifth consecutive week to 4.71% from 4.78% last week. A year earlier, the 30-year stood at 5.53%.
“The 30-year has never been this low since Freddie Mac began its weekly survey in 1971,” the secondary lender proclaimed.
The average 15-year fixed-rate mortgage eased to 4.27% from the previous week’s 4.29%. Freddie said it has been tracking the 15-year since 1991 — and this week’s average was the lowest on record.
But fixed rates are likely to climb in next week’s survey based on the 10-year Treasury bond yield, which climbed to 3.366% during trading today from 3.28% as of the market’s close on Wednesday, Nov. 25, according to data from both the U.S. Department of the Treasury and WSJ.com.
The majority of Bankrate.com’s 100 panelists for the week Dec. 3 to Dec. 9 were in concurrence, with 62 predicting that rates will rise at least 3 BPS during the next 35 to 45 days. Less than a third saw no changes ahead, and just seven forecasted a decline.
The five-year Treasury-indexed hybrid adjustable-rate mortgage increased 0.01% from last week to average 4.19%.
The one-year Treasury-indexed ARM dropped 10Â BPS from last week to 4.25% — its lowest level since the week ended June 30, 2005 when the average was 4.24%. A year ago, the one-year averaged 5.02%.
The yield on the one-year Treasury bill closed at 0.28% yesterday, higher than 0.26% a week earlier, according to the Treasury Department. The one-year Treasury serves as an index on many conforming ARMs, while the six-month London Interbank Offered Rate serves as the index on many subprime ARMs. Bankrate.com reported LIBOR at 0.48% yesterday, off slightly from 0.49% a week earlier.
In its Weekly Mortgage Applications Survey for the week ended Nov. 20, the Mortgage Bankers Association said ARMs accounted for 5.3% of all activity, higher than the previous week’s 5.1%.
Record mortgage rates have failed to stimulate new 1003 loan applications.
MBA said overall applications in its latest survey were down 5% on a seasonally adjusted basis from the prior week. The decline came despite that rates also fell to record lows last week.
Refinances were down 10% in MBA’s survey, bringing the share of refinances down to 72% from 75% a week earlier. Purchase activity, however, eaked out a gain of less than 1% over the past seven days.
