Rates Lowest in Northeast

Back down to levels from the beginning of this month, the 30-year fixed-rate mortgage average fell seven basis points (BPS) within the past seven days to 6.25% and the 15-year at 5.64% dropped by six BPS, according to Freddie Mac’s latest survey of 125 thrifts. The 1-year Treasury-indexed adjustable-rate mortgage (ARM) average stalled at 4.13% for the second consecutive week.

Freddie attributed “this week’s easing off in mortgage rates” to the “market’s wait-and-see posture with regard to the Federal Reserve Board’s upcoming actions on interest rates this year starting with their meeting at the end of June.”

The Fed has hinted that it may raise short-term interest rates at that time and the consensus among economists is that they will increase by over a percentage point by the end of the year.

In line with the anticipated rate hike, half of the mortgage industry panelists surveyed this week at Bankrate.com said they believe mortgage rates will rise over the next 30 to 45 days and the other half think rates will stay about the same (plus or minus 2 basis points). None project rates to fall.

Freddie foresees the 30-year mortgage rate staying in its current range of six to seven percent for the rest of the year.

Out of the five geographical regions of the country, Freddie said the Northeast had the lowest rates and also had the largest week-to-week drop in the 30-year — it plunged 13 BPS to 6.20%. The 30-year was highest in the North Central region, where it averaged 6.34%.

Although the stack of mortgage applications only grew by 0.1% from last week, it is the second week it has grown after a five-week decline, the Mortgage Bankers Association (MBA) reported. Purchase money application activity edged up by 1.1%, while refinances decreased 1.7%.

The refinance and ARM share of total mortgage applications reportedly edged down from the previous week to 33.4% and 33.5%, respectively.

MBA said mortgage applications remain almost a third below the level reached at this time last year when fixed-rates were reportedly about one percentage point below their current level and the 1-year ARM had bottomed out for the year.