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Record Low Rates to Surge Higher
Average 30-year fixed-rate 4.17%
Nov. 11, 2010
By SAM GARCIA Mortgage Daily
More consumers went shopping as fixed rates fell to record lows. But fixed rates will likely be much higher in next week's reports.
Declining to a new record low, the average 30-year fixed-rate mortgage was 4.17 percent in Freddie Mac's Primary Mortgage Market Survey for the week ended Thursday. The 30-year was 4.24 percent a week earlier.
Freddie's chief economist, Frank Nothaft, attributed the improvement to the Federal Reserve's third policy announcement that it will purchase up to $600 billion in government securities.
But the 30-year will likely be higher in next week's reports based on an analysis of the 10-year Treasury yield. The 30-year could come in higher than 4.30 percent.
Even half of the panelists surveyed by Bankrate.com for the week Nov. 11 to Nov. 18 predicted that mortgage rates will increase at least 3 BPS during the next week or so. A decline was forecasted by 29 percent, and no change was expected by 21 percent.
Also reaching a record-low was the average 15-year fixed-rate mortgage, which Freddie said fell to 3.57 percent from last week's average of 3.63 percent.
But there was no change from last week for the one-year Treasury-indexed ARM, which Freddie reported at 3.26 percent.
Last week, when the one-year ARM fell to its lowest level on record and the 30-year fixed rate rose, slightly fewer consumers opted for an ARM, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended Nov. 5.
More consumers were out shopping for a mortgage this week, with the Mortgage Market Index increasing to 311 from last week's 288.
Refinances drove the improvement, with the refinance share increasing to 61 percent this week from 60 percent.