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| Applications eased as rates started up. But promising comments from the Fed may ease pressure on rising rates.
The 30-year fixed-rate mortgage averaged 6.80%, up 6 basis points from last week to the highest level since May 2002, according to today’s announcement of Freddie Mac’s latest Primary Mortgage Market Survey results. At this time a year ago, the 30-year was 1.07% lower. “Financial markets were a bit jittery after core Consumer Price Index figures for June were released that indicated inflation might still be a potential threat,” commented Freddie Chief Economist Frank Nothaft in the announcement. “If this were the case, the Fed would be more inclined to continue to raise rates this year. Mortgage rates reflected that thinking and rose accordingly.” “However, Fed Chief Bernanke, in his semi-annual speech to Congress, hinted that another rise in overnight lending rates might not be imminent and financial markets breathed a collective sigh of relief, which should be reflected in the results of next week’s survey.” Of the 100 mortgage “experts” surveyed by Bankrate.com this week, half believe mortgage rates will remain relatively unchanged over the next 35 to 45 days, 37 percent think rates will go up and the rest believe they’ll fall. While Freddie’s data shows the 30-year began the second quarter at 6.43% and ended the period 35 BPS higher, the Mortgage Bankers Association’s updated long-term forecast indicates the forthcoming rise in the 30-year will be more moderate; going from its the current level to 6.9% next quarter and staying there until sliding to 6.7% in the first quarter 2008. The 15-year average inched up 4 BPS over the past seven days to 6.41%, Freddie said. The gauge for long-term mortgage rates, the 10-year Treasury note, traded at 100.72 with a 5.03% yield in afternoon trading, down 2 BPS for the day. The smallest reported weekly increase — 3 BPS to 6.36% — was in the average for 5-year Treasury-indexed hybrid adjustable-rate mortgages. Climbing 5 BPS from a week ago, the average for 1-year Treasury-indexed ARMs was reported at 5.80%. The 1-year T-bill itself fell 4 BPS from a week prior to 5.22% Wednesday, the Federal Reserve reported. About 5% fewer applications were completed than in the prior week as purchase money loan demand fell 6% and refinance requests decreased by 2%, the MBA said Wednesday. The share of total applications for refinances inched up from the previous week to 35% and for ARMs remained at 29%, MBA said. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. e-mail: [email protected]
