Fixed Rates to Continue Edging Up

Increasing five basis points from last week, the average 30-year fixed-rate mortgage came in at 5.82%, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The average is still better, however, than 5.99% a year ago.

“Long-term mortgage rates will more than likely rise over the next few months, albeit modestly compared to shorter-term rates,” said Freddie chief economist Frank Nothaft in the announcement. He noted that the Federal Reserve is expected to continue raising the targeted overnight-lending rate, which the prime rate follows. Currently, the prime rate is reportedly 6.25% and many anticipate it will jump to 6.50% next week.

The average for the 15-year was reported at 5.38%, an increase of four BPS from a week earlier.

The 10-year Treasury-note was trading at 98.47 late Thursday, off 0.16 for the day with a yield of 4.31%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage average went up three BPS to 5.30% this week, Freddie said.

The smallest increase was seen in the 1-year Treasury-indexed ARM average, which reportedly edged up only 1 BPS from last week to 4.47%. The upturn was more noticeable in the 1-year’s index, the 1-year T-bill, as its yield climbed to 3.82% on Wednesday from 3.77% a week ago.

The 100 mortgage bankers, mortgage brokers and other industry “experts” surveyed by Bankrate.com seemed to be under a similar impression; two-thirds expected rates to climb over the next 35 to 45 days, while the rest were equally split on whether rates would drop or stay about the same.

Overall application volume was almost unchanged from the previous week, according to the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey, which showed that a 3% decline in refinance requests offset the 2% increase in purchase money loan requests.

The share of refinance applications edged down from the prior week to 42%, MBA added, while the ARM share nudged below 29%.