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Amid uncertainty, rates fell below six percent again, while mortgage loan application activity declined for the second week in a row.
The 30-year fixed-rate mortgage average fell 14 basis points (BPS) from the prior week to 5.88%, reported Freddie Mac in the current week’s Primary Mortgage Market Survey. A year ago, it was 6.04%. “Not only does it look like the annual 30-year rate for 2003 will fall to the lowest level in the 32-year history of our survey, but next year’s rates won’t be a lot higher,” said Freddie’s chief economist Frank Nothaft in the announcement. Down 12 BPS from the previous week and averaging 5.24%, the 15-year average fell less than the 30-year, said Freddie. Sixty percent of the mortgage brokers, bankers and other industry experts surveyed by Bankrate.com expect that rates will remain unchanged (plus or minus 2 BPS over the next month and a half. The rest were evenly split between rising (20%) and falling (20%) rates. One panelist said rates will stick to low levels because investors are taking on a “wait-and-see attitude” –waiting to see how the new year begins after holiday shopping sales numbers come in, and also fourth quarter employment and production numbers. Meanwhile, mortgage loan application activity fell 12.2% percent from the previous week, with the Market Composite Index ending at 601.6, the Mortgage Bankers Association of America (MBA) reported. A year ago, the index stood at 862.7, according to MBAs Weekly Mortgage Applications Survey for the week ending Dec. 5. Purchase money applications decreased by 9.5%, with the Purchase Index falling to 399.8, but refinance applications plunged 15.5%, with that index dropping to 1775.5, said MBA. The refinance share of application activity fell slightly from last week to 49.4%. “The drop in refinancings as a share of total loan originations is bringing to light the desire of many homebuyers to look at adjustable rate and hybrid loan products, those where the rate is fixed for 3 to 7 years, as an alternative to traditional fixed rate financing, particularly as short-term rates remain so low,” said MBA vice president of research and economics Jay Brinkman, in an announcement. The average for the 1-year Treasury-indexed adjustable-rate mortgage (ARM) has remained unchanged for three consecutive weeks at 3.77%, according to Freddie. Unlike the refinance share, the ARM share of activity increased 2.7% from the previous week to 29.3%. A year ago, refinances accounted for 70.0% of total applications and ARMs only 14.4%. In late trading Thursday, the 10-year Treasury note yield was 4.25% and the price 100. A week ago, the yield closed at 4.36% and the price at 99 2/32. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.
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