|
||
Last week’s record low rates helped drive loan applications to their highest level ever. As rates continue to hover near record lows, the outlook is for more of the same.Mortgage loan applications soared almost seventeen percent above last week’s level, according to the Mortgage Bankers Association of America (MBA). Compared to a year ago, applications are more than double.
The application index was adjusted for the Labor Day holiday week. Refinance applications led the jump in activity, MBA reported, increasing nineteen percent from the prior week. More than 72% of all applications this week were for refinances, according to the survey of mortgage bankers, commercial banks and thrifts. The record level of activity was driven by the prior week’s record low average mortgage rates. Freddie Mac reported that the average thirty-year fixed rate mortgage inched up 0.03% — or three basis points (BPS) — from last week’s 31-year low to 6.18%. In the western region of the country, the 30-year average was 6.09%. “Markets are on edge, trying to decipher the implications of the latest economic and political statements,” said Frank Nothaft, Freddie Mac’s chief economist. “It’s that uncertainty that is keeping mortgage rates from moving one way or the other.” The average fifteen-year fixed rate, which last week was reported at its lowest point since Freddie began tracking it, also increased 3 BPS to 5.59%. The spread between the 15-year and the 30-year remains at 59 BPS, according to the survey of lenders. Freddie said the average one-year adjustable rate mortgage (ARM) fell three BPS to 4.32%. The spread between the 30-year fixed rate and the one-year stands at 1.86%. MBA reported that ARM’s represented 12.3% of total applications. Seventy percent of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect rates to remain at their current levels over the next five weeks. Bankrate.com’s financial analyst expects the 30-year fixed rate to stay near 6.25%. Freddie’s Nothaft said, “mortgage rates will average only slightly above current levels in 2003.” This week Federal Reserve Chairman Alan Greenspan warned that a failure to rein in rising national budget deficits could drive interest rates and borrowing costs higher. The Wall Street Journal reported about the comments made by the Fed chief to the House Budget Committee. The 10-year Treasury was trading higher in morning trading. According to Lioninc.com, the 10-year was up 4/32 to yield 3.94%. Last week, the early afternoon trading yield was reported at 4.03%. |
Sam Garcia has been in mortgage lending since 1980, and is publisher of MortgageDaily.com. He also owns and operates CloseNow.com, a real estate portal site.
email:Â SamGarcia@MortgageDaily.com