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| Applications eased as rates inched up for the first time in five weeks to where they are expected to linger for the remainder of the year.
The 30-year fixed-rate mortgage averaged 5.74 percent, up three basis points from a week ago, according to Freddie Mac’s announcement of its latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The average for the 15-year edged up two BPS to 5.32 percent this week, Freddie said. “Mortgage rates were relatively unchanged this week as the markets wait for the results of the upcoming Federal Reserve policy committee meeting,” commented Freddie chief economist Frank Nothaft in a written statement. “Core Consumer Price Index (CPI) released this week came in lower than had been expected, which led the market to believe that the Fed has further room to take a pause in raising rates and this has kept financial markets fairly quiet this week.” It “appears likely that 30-year fixed-rate loans will carry interest rates below 6.0% for the balance of the year,” Freddie said in its latest economic and housing outlook. The Mortgage Bankers Association’s September forecast has the 30-year averaging 5.8% next quarter and jumping to 6.1% in the first quarter next year. None of the 100 mortgage industry bankers, brokers and individuals Bankrate.com surveyed this week expect rates to rise over the next 35 to 45 days, three-fifths of the panel believe rates will drop and the rest predict they’ll stay about the same. The spread between the 30-year and the 15-year is currently at 0.42%, according to Freddie’s report, way down from 0.62% a year ago. The 10-year Treasury note yielded 4.22% with a price of 100.22 at midday, worse than 4.13% and 100.91 a week earlier. The 5-year Treasury-indexed hybrid ARM reportedly averaged 5.26 percent this week, nudging up two BPS from last week. Freddie said the 1-year Treasury-indexed ARMs came in one BPS higher at 4.46%. The index — the 1-year Treasury bill — moved up eight BPS within the past week to 3.81% as of Tuesday, the Federal Reserve said. The spread between the 30-year and 1-year ARM has narrowed 44 BPS from last year to 1.28%, according to Freddie’s data. The ARM share of loan requests edged up from the prior week to 28%, MBAs latest Weekly Mortgage Applications Survey said. During the holiday-shortened week, originators completed slightly fewer mortgage applications than in the previous week, according to MBA. The small decrease pushed the Market Composite Index, a measure of mortgage application volume, down to 760.6, but this is still better than 678.2 a year ago. Despite a 3% upturn in purchase money loan requests, the weekly overall volume downturn was caused by a 7% slowdown in refinance requests, MBA reported, which in turn also lowered the refi share of total applications to 43% from 45% in the previous week. |
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Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. E-mail: [email protected]
