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Mortgage rates tumbled — though they are projected to increase for the remainder of the year. Meanwhile, the level of mortgage applications improved.
The 30-year fixed-rate mortgage averaged 6.31% — 15 basis points below the level a week earlier, according to Freddie Mac’s latest Primary Mortgage Market Survey. A year ago, the average was at 6.43%. Over the next 35 to 45 days, rates are likely to continue falling, according to half of the 100 mortgage “experts” surveyed by Bankrate.com. Forty-two, however, said they will rise and the rest saw rates remaining relatively unchanged. Fannie Mae’s outlook released today has the 30-year averaging 6.58% this quarter and falling to 6.48% next quarter. But the Mortgage Bankers Association’s latest forecast has it averaging 6.6% through the rest of the year. The Federal Reserve is not expected to make any changes in rates throughout the rest of the year, according to a report by Rate Link. The 15-year fell 18 basis points to 5.97% this week, Freddie said. The 10-year Treasury note, which long-term mortgage rates tend to follow, yielded 4.49% around noon — up 8 BPS for the day but not far from 4.50% a week ago. At 6.17%, the 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly fell 15 BPS from last week. The smallest mortgage rate decline, 8 BPS to 5.66% this week, occurred with the 1-year Treasury-indexed ARM, Freddie said. But the yield on the 1-year T-bill itself sank 23 BPS in a week’s period to 4.16% Tuesday, Federal Reserve data showed. The ARM share of total mortgage applications edged up from the previous week to just above 13%, according to MBA’s application survey for the week ending Sept. 7. Overall mortgage application volume increased nearly 6% from the prior week, including an adjustment for the Labor Day holiday, MBA said. The upturn reflected a 6 percent improvement in refinance requests and 5% increase in purchase money application activity. The refinance share reportedly increased from the previous week to 42%. Economists at UBS Investment Research called the application activity data “exaggerated,” noting that they believed the improvement reflected more applicants reapplying after being rejected due to tighter underwriting standards. Plus, they believed subprime lenders, who have seen drastic declines in loan activity, are likely underrepresented in the data, according to a newsletter. Last month, MBA noted a weekly improvement in application activity could be due to “the level of retail application activity at the large lenders that participate in the MBA survey rather than representing a system-wide increase.” |
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