Rates, Apps Deteriorate

The 30-year averaged 6.42% in Freddie Mac’s latest weekly survey of 125 thrifts, commercial banks and mortgage lending companies. The 30-year rose 0.10% from a week earlier but was lower than 6.69 percent during the same week in 2007.

The average 30-year has risen each week since May 22 and hasn’t been this high since Sept. 27, 2007, when it averaged 6.42 percent.

Fixed rates for jumbo loans were 1.36% higher than conforming fixed rates, BanxQuote reported yesterday. The spread, which had been as wide as 1.90 percent in March and as low as 0.16% during July 2007, narrowed by 0.01% from the prior week.

The 15-year fixed-rate mortgage averaged 6.02 this week, climbing from 5.93% last week, Freddie reported.

Frank Nothaft, Freddie’s chief economist, noted fixed-rates were driven higher because of the stronger levels of inflation reflected in May’s consumer and producer price indexes.

“Additionally, consumer prices rose 0.6 percent last month, the most since November 2007, and traders began to fully price in a Federal Reserve rate hike by the end of September, based on the federal funds futures market,” Nothaft stated.

Fixed mortgage rates tend to move with the 10-year Treasury yield, which near midday was 4.19%, CNNMoney reported. Seven days earlier, the 10-year yield was 4.18%.

A plurality of the panelists surveyed by Bankrate.com for the week June 19 to June 25 see mortgage rates falling, with 42% predicting rates will decline by at least 3 basis points during the next 35 to 45 days. Nearly one-third see rates rising, while just over one-quarter forecast a decline.

Freddie said the average 5-year Treasury-indexed hybrid adjustable-rate mortgage was 5.89%, climbing from 5.70% last week.

The 1-year Treasury-indexed ARM rose 10 BPS to 5.19%, according to Freddie’s survey. The underlying index, the 1-year Treasury yield, was 2.53% yesterday, data from the U.S. Treasury indicated. Seven days earlier, the 1-year yielded 2.47%.

Another ARM index, the 6-month London Interbank Offered Rate, was 3.22% on Wednesday, Bankrate.com reported. LIBOR was 3.17% a week prior.

ARMs accounted for 10% of mortgage applications tracked by the Mortgage Bankers Association for the week ended June 13, nudging lower from the previous week.

MBA said overall applications fell 9% on a seasonally adjusted basis over the past week, leaving the Market Composite Index at 508.4. A 15% drop in refinance applications accounted for most of the decline and left the refinance share at 37%, down from 40% seven days earlier.

While purchase applications were down only 4% in MBA’s survey, government applications rose 4%.