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| While indexes on adjustable rate mortgages continued climbing, Treasury yields took a breather — sending the 10-year yield to its lowest level in over a year.
In late afternoon trading, U.S. Treasury prices rose, pushing the 10-year Treasury-note yield down to 3.89% — the lowest since March 31, 2004, according to the Federal Reserve Statistical Release. The last time the 10-year’s yield was this low, the volume of mortgage applications was 54% higher, data from the Mortgage Bankers Association indicate. ARMs have picked up steam even though indexes their rates are based on, such as the 6-month London Interbank Offered Rate index, the 11th District monthly weighted average Cost of Funds Index and the Monthly Treasury Average index, have risen considerably since a year ago. ARMs currently account for a third of total applications, compared to 29% in the first week of April a year ago, MBA has reported. The 6-month LIBOR increased for the 15th consecutive month to 3.5314% in May, up from 3.4151% in the previous month and way above 1.5789% a year ago, according to Fannie Mae. The cost of funds index, or COFI, continued an 11-month ascending trend, jumping to 2.515% in April from the previous month’s 2.400%, the Federal Home Loan Bank of San Francisco said Tuesday. At the same time last year, the figure was 1.802%. The COFI, announced about 30 days following the end of each month, reflects the actual interest expense reported for a given month by the Arizona, California, and Nevada savings institutions members of the Bank. |
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Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.email: s3celeste@aol.com |
