|
|
| Current and prospective borrowers took note of low rates — pushing application volume higher and leaving a rosy outlook for more increases.
Within the past seven days, the 30-year fixed-rate mortgage average and the 15-year both nudged up 2 basis points (BPS) to 5.72% and 5.12%, according to Freddie Mac’s latest Primary Mortgage Market Survey. Meanwhile, the 1-year Treasury-indexed adjustable-rate mortgage (ARM) average nudged 3 BPS in the opposite direction — falling to 3.97%. Freddie chief economist Frank Nothaft noted in the survey announcement that rates are on target with industry prediction, adding that its “forecast is for the 30-year fixed-rate mortgage rate to remain below six percent for the rest of the year and not much higher than that for 2005” — during this time Freddie’s outlook has the average peaking at 6.2%. Fannie Mae’s predictions for the 30-year are similar to Freddie’s as it expects economic growth to accelerate modestly from its current “slightly below-trend” and mortgage rates to increase at a measured pace, according to its latest forecast. However, oil prices and terrorism remain risks that can reverse its predictions, Fannie said. At Bankrate.com, the surveyed panel of mortgage bankers, brokers and other industry participants seem to think mortgage rates have bottomed-out for the year; 50% believed rates will remain unchanged over the next month and a half, another 37% voted for an upturn, and only 13% voted for a downturn. In the meantime, mortgage hunters are taking advantage of below-six-percent rates as reflected in the Market Composite Index of mortgage loan applications — which increased 5% since the prior week to 724.7, the Mortgage Bankers Association (MBA) reported. The index is up from 707.2 in its application survey a year ago when mortgage rates were 20 to 25 BPS above their current level. While the Refinance Index jumped 8% from the previous week, MBA said, the Purchase Index increased just 3%, on a seasonally adjusted basis. The Washington, D.C., trade group noted, on an unadjusted basis, refinancing activity is at the highest level since the third week of April and that purchase money activity is up 18% from a year ago. While purchase originations are expected to set a record in 2004, forecasts for overall mortgage originations have fluctuated with rates. In June, after payroll employment had fallen below expectations in late spring, Fannie and Freddie predicted industry originations of nearly $2.3 trillion, while the MBA forecasted over $2.4 trillion. In their September outlooks, the government-sponsored enterprises have totals nearing $2.6 trillion and the MBA slightly higher, nearing $2.7 trillion. The share of refinance applications edged up from the prior week to 46%, MBA reported, and the ARM share was mostly unchanged at about one-third of total applications. The 10-year Treasury note traded early Friday at a price of 100 18/32 and 4.17% yield. A week ago, the note closed at a yield of 4.04%. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]
