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| As weak economic reports prompted long term rates to sink to the lowest level in over two years, a flurry of mortgage hunters, mostly those seeking to refinance, raided originator shops.
The 30-year fixed-rate mortgage averaged 5.87% — plunging 20 basis points from the prior week to the lowest level since September 2005, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending today. At this time a year ago, the average was 6.21%. Over the next month and a half, mortgage rates are likely to go up, according to nearly half the panel of mortgage industry bankers, brokers and individuals surveyed by Bankrate.com this week. One-third think rates will fall, and one-fifth believe rates will remain relatively unchanged. For the quarter, the 30-year is expected to average 5.93%, Fannie Mae said in its latest forecast, which has the average climbing past 6% until the last quarter of the year. At 5.43%, the 15-year average was 25 BPS lower than last week, Freddie said. Mortgage rates sank following weak economic data that “renewed concerns about economic conditions in the near future,” Freddie Chief Economist Frank Nothaft said in an announcement. Not only did the latest employment report show the smallest gain in jobs — 18,000 in November — since late 2003 and the unemployment rate jumping to a two-year high of 5%, other data informed the non-manufacturing service sector had the slowest expansion in nine months and that it is likely home sales will decrease. The barometer for long-term mortgage rates, the 10-year Treasury-yield, was at 3.88% late today, off about 5 BPS from last week, according to CNNMoney.com. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.63%, falling 15 BPS below the level a week ago. Down 10 BPS to a reported 5.37% this week was the 1-year Treasury-indexed ARM average. The 1-year Treasury yield of 3.04% today fell 9 BPS within a week’s period, U.S. Treasury data showed. A competing ARM index, the 6-month London Interbank Offered Rate, was 4.33% as of yesterday — off 27 BPS from a week earlier, according to Bankrate.com. ARMs accounted for about 9% of total mortgage applications in the week between the Christmas and New Year holidays, edging down from 10% a week earlier, the Mortgage Bankers Association reported on Wednesday. Overall mortgage application volume jumped 33% from the previous week as refinance requests shot up 54% and purchase money application activity increased 15%, MBA said its application survey for the week ending Jan. 4. showed. Accordingly, the refinance share of total applications increased to 58% from 51% a week earlier, MBA said. |
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