As the 30-year mortgage hung on to its record low rate and the one-year adjustable-rate mortgage fell to a new low, loan activity jumped 17 percent. Meanwhile, the spread between jumbo and conventional mortgages widened for the sixth week in a row.
There was no change in the average 30-year fixed-rate mortgage, Freddie Mac reported in its Primary Mortgage Market Survey for the week ended July 15. The 30-year remained at a record-low 4.57 percent — lower than 5.14 percent 52 weeks earlier. In its July 2010 Economic Housing Market Outlook, Freddie predicted that the 30-year will average 4.7 percent this quarter and 4.8 percent in the fourth quarter.
In the Mortech-MortgageDaily.com Mortgage Market Index report for the week ended July 14, the conventional 30-year climbed to 4.555 percent from 4.519 percent a week earlier, while the jumbo 30-year jumbo rose to 5.550 percent from 5.500 percent. The resulting spread between the conventional and jumbo rates widened to 100 BPS from 98 BPS and has increased each week since June 2 when it was 81 BPS.
Data from the U.S. Department of the Treasury indicated that the 10-year yield closed today at 3.00 percent, falling 4 BPS from a week earlier and leaving room for a possible new record-low 30-year mortgage next week.
But just 5 percent of the panelists surveyed by Bankrate.com for the week July 15 to July 21 expect rates to fall at least 3 BPS over the next week. A majority projected no changes and 40 percent predicted rates will slide.
The 15-year moved 1 basis point lower than last week to 4.06 percent in Freddie’s survey.
Rising 10 BPS, the five-year Treasury-indexed ARM averaged 3.85 percent in Freddie’s survey.
Freddie said the one-year Treasury-indexed ARM averaged 3.74 percent this week, 3.75 percent last week and 4.76 percent a year ago. The most recent reading was the lowest ever since Freddie began tracking the one-year in 1984. The secondary lender expects the one-year to average 4.0 percent in the third and fourth quarters.
The underlying index for the one-year ARM, the yield on the one-year Treasury bill, fell to 0.27 percent today from 0.30 percent last Thursday, according to the Treasury. A competing but less used ARM index, the six-month London Interbank Offered Rate, finished yesterday at 0.73 percent, 1 basis point better than a week earlier, according to Bankrate.com.
In the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended July 9, ARMs accounted for 5.5 percent of activity, a hair above 5.4 percent seven days earlier. Freddie sees third-quarter ARM share coming in at 5 percent then edging up to 6 percent in the fourth quarter.
The Mortgage Market Index increased to 334 from 286 last week. The index reflects the level of pricing inquiries by mortgage brokers at Mortech Inc. The average U.S. loan amount decreased to $215,606 from $217,645 last week. Hawaii’s average $316,286 was the highest of any state, and South Dakota’s $155,562 was the lowest.
MBA’s report, which reflects data from a week earlier, indicated application activity fell 3 percent from the previous week on a seasonally adjusted basis. Refinances fell 3 percent but purchase activity sank 13 percent.
Refinance share in the Mortgage Market Index report inched up to 61 percent from the prior week’s 59 percent. This week’s share reflected a 45 percent rate-term share and a 16 percent cashout share. Refinance share was projected by Freddie at 60 percent of applications for the third quarter and 50 percent for the fourth quarter.
