| Apps Fall, Rates Follow Suit
Freddie reports crest in mortgage rate surge August 15, 2003 By ANNE LINEBERRY |
| Fifteen-year fixed mortgage rates blinked this week, edging slightly downward after a relentless eight-week climb, Freddie Mac said.
In its weekly Primary Mortgage Market Survey, Freddie reported the 15-year rate average at 5.58 percent, down eight basis points from last week’s 5.66 percent. Last year the rate averaged 5.63 percent, Freddie said. The 30-year fixed rate also fell slightly, averaging 6.24 percent, 10 basis points off from last week and slightly higher than last year’s average of 6.22 percent. Both rates carried 0.7 discount points. Forty percent of Bankrate.com’s industry experts predict that rates will fall soon. The rest are evenly divided, with 30 percent forecasting a rise in rates and 30 percent believing rates will hold steady. Amy Crew Cutts, Freddie’s deputy chief economist, says the future of rates short term will be difficult to predict. “Continued volatility in financial markets, however, will keep rates teetering up and down for some time to come. Today’s higher rates reflect an additional premium for expected inflation, which is adding to this volatility in mortgage rates,” she said. In its monthly outlook, Freddie’s chief economist Frank Nothaft also noted the market’s volatility, which, along with the recent northern stampede of the fixed rates, had caused Freddie to revise their forecast upward. Freddie’s new prediction is for 30-year rates to average 5.9 percent in the third quarter and 6.1 percent in the fourth quarter. “We believe that the risk of modestly falling rates exceeds the risk of rising rates over the next few months,” he said, adding a word of warning about the current environment of predictions. “The impact of the volatility in interest rates and the contradictory information in other economic indicators on a forecaster’s ability to predict the future cannot be stressed enough. The point estimates in our outlook are highly sensitive to these factors and we appeal to economic fundamentals in interpreting the projections,” he said. Applications fell for the week ending August 8. According to the Mortgage Bankers Association of America (MBA), the index was 824.6 on a seasonally-adjusted basis. In the prior week the index measured 983.2. The (MBA) Weekly Mortgage Applications Survey has reported applications waxing and waning over the last three weeks, but the refinance index has fallen to its lowest rate in a year, according to National Mortgage News. The index measured 3238.4, a whopping 20 percent lower than last week. Refinances comprised 55.8 percent of total applications. Adjustable-rate mortages accounted for 22.5 percent of all mortgages, MBA said. Freddie reported the one-year Treasury-indexed adjustable-rate mortgage averaging 3.75 percent, with 0.7 discount points. This represents a dropoff of five basis points from the prior week. The 10-year Treasury bond yield closed at 4.52% Thursday. |
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Anne Lineberry is MortgageDaily.com‘s editor. She previously worked as an online editor/producer for DallasNews.com and on the Metropolitan desk for the print edition of The Dallas Morning News. Email Anne at AnneLineberry@MortgageDaily.com |
