Refis Fuel Higher Apps

The 30-year fixed-rate mortgage averaged 6.12%, ticking up 1 basis point from a week ago after falling for four consecutive weeks, Freddie Mac said its latest survey of 125 mortgage-lending companies, thrifts and commercial banks showed. Last year at this time, the average was 6.30%.

“Mixed economic reports have kept mortgage rates from making any drastic changes this week,” said Frank Nothaft, Freddie chief economist, in a written statement. “On the upside, there was stronger job growth and greater than expected retail sales in November. Offsetting that news was weaker wage growth in that same time frame and lower indications of consumer sentiment in December.

“Long-term mortgage rates, while expected to rise over the new year, will very likely not get up to even 7 percent, which will help to moderate the current weakness in the housing market.”

Freddie sees the 30-year averaging 6.3% this quarter and ending next year at 6.4%, according to its December forecast.

This week, half of the 100 mortgage industry individuals, brokers and bankers surveyed by Bankrate.com predicted rates will remain relatively unchanged over the next 35 to 45 days, while 30 percent forecast a downturn and 30 percent predict an increase.

Up 2 BPS from last week, Freddie said the 15-year came in at 5.86%.

Near midday, the 10-year note yielded 4.58%, worse than a week ago, when the gauge for longer-term mortgage rates yielded 4.49%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.92%, unchanged from last week, according to the survey.

The average 1-year Treasury-indexed ARM, reported at 5.45%, nudged up 2 BPS from last week. The 1-year Treasury bill itself was 4.91% on Tuesday, 5 BPS higher than a week earlier, Federal Reserve data showed.

Mortgage application volume jumped 11 percent during the week ending Dec. 8, according to the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey. The upturn reflected a 9 percent increase in purchase money loan applications and a 16% boost in refinance requests.

“The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity,” said Mike Fratantoni, MBA senior economist, in an announcement. “Additionally, we are seeing a steady increase in purchase applications.”

The refinance share of total mortgage requests increased from the previous week to 53%, continuing at its highest level since April 2004, and the ARM share edged up to 25%, MBA reported.