It was another record-low for fixed mortgage rates this week. Faced with such attractive interest rates, droves of prospective borrowers began mortgage shopping.
After falling to the lowest level on record last week, the average 30-year fixed-rate mortgage declined another 11 basis points to 4.58 percent in Freddie Mac's survey of 125 mortgage lenders for the week ended today. It was the lowest level for the 30-year since Freddie began collecting weekly data in 1971. A year ago, the 30-year was 5.32 percent.
In the Mortech-MortgageDaily.com Mortgage Market Index report for the week ended June 30, the conventional 30-year fell to 4.546 percent from 4.652 percent last week. At the same time, the 30-year jumbo rate fell 10 BPS to 5.490 percent.
During early trading today -- as the Dow Jones Industrial Average tumbled more than a hundred points -- the 10-year Treasury bond yielded 2.901 percent, falling from 3.14 percent at the market's close last Thursday, based on data from the U.S. Department of the Treasury and WSJ.com. The decline suggests mortgage rates have room to move lower by next week's reports.
A plurality of Bankrate.com panelists for the week July 1 to July 7 predicted an increase in mortgage rates of at least 3 BPS during the next week. But no changes are ahead according to 38 percent of the panelists, while 19 percent forecasted a decline.
Moving on to the 15-year fixed-rate mortgage, Freddie said the average declined to 4.04 percent from last week's 4.13 percent. The 15-year has never been this low in the 19 years the secondary lender has been tracking it.
Also falling to the lowest level on record was the five-year Treasury-indexed adjustable-rate mortgage, which Freddie reported at 3.79 percent. The five-year was 3.84 percent seven days earlier.
But Freddie said the one-year Treasury-indexed ARM rose 3 BPS to 3.80 percent. A year ago, the one-year averaged 4.94 percent. The index for the one-year, the yield on the one-year Treasury bill, increased to 0.32 percent yesterday from 0.30 percent last week, according to the Treasury.
Another ARM index, the six-month London Interbank Offered Rate, was 0.75 percent yesterday, Bankrate.com reported. LIBOR has not moved for two consecutive weeks.
Last week, when fixed rates reached record lows, ARM share fell to 4.7 percent from 4.9 percent, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended June 25.
Mortgage activity jumped 30 percent this week based on the Mortgage Market Index, which came in at 355. The report also indicated that the average U.S. loan amount rose to $222,272 from last week's $215,847. Washington, D.C.'s, $292,580 was higher than in any of the 50 states, while West Virginia's $157,350 was lower than any other state.
The increase in the Mortgage Market Index was driven by refinances, which accounted for 61 percent of activity compared to 51 percent last week. Rate-term refinance share was 47 percent this week, while cashout share was 14 percent.
MBA said refinances increased 13 percent last week, pushing overall mortgage activity 9 percent higher on a seasonally adjusted basis. Purchase applications were down 4 percent.