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| Mortgage rates saw a big weekly improvement — though longer term forecasts have interest rates worsening. Originators, meanwhile, maintained the same level of 1003 applications as the prior week.
The 30-year fixed-rate mortgage fell to 6.33% from 6.40% last week and a year ago, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The 15-year averaged 5.99%, tumbling 9 basis points from a week ago, Freddie said. Long-term mortgage rates’ guiding yield, that of the 10-year Treasury note, was at 4.38% around noon — 13 BPS lower than last week. “Market concerns about slower economic growth over the next few months allowed mortgage rates to drift lower from last week,” said Frank Nothaft, Freddie chief economist, in an announcement. With sales of existing single-family homes in September dropping to the slowest pace in nearly a decade, “how much of a drag the housing slump will be on the economy remains unknown. Additionally, recent reports suggest some regional manufacturing weakness in October.” There was not a clear consensus on the direction of rates among the mortgage industry panelists surveyed by Bankrate.com this week, as 38 forecast a downturn over the next month and a half or so, 31 predict a rise and another 31 think rates will remain relatively unchanged. The Mortgage Bankers Association’s latest long-term forecast has the 30-year rising from its current level to average 6.5% for the quarter and climbing 10 BPS every three months thereafter until reaching 6.8% in the third quarter and throughout 2009. The 5-year Treasury-indexed hybrid adjustable-rate mortgage average fell 8 BPS within a week to 6.03%, Freddie reported. Sinking 10 BPS to 5.66% this week was the average for 1-year Treasury-indexed ARMs, Freddie said. And the 1-year Treasury bill yield itself saw a deeper weekly slump — 20 BPS to 3.91% on Wednesday, Federal Reserve data showed. MBA said it expects the 1-year Treasury ARM to average 5.5% for the quarter, rise to 5.6% for the first half of 2008 and go up another 10 BPS for the second half. The 6-month London Interbank Offered Rate averaged 4.94% for the week ending yesterday — 19 BPS lower than in the prior week, Bankrate.com reported. The ARM share of total mortgage application activity remained at 14%, according to MBA’s Weekly Mortgage Application Survey for the week ending Oct. 19. Although refinance requests jumped 4% from the prior week, a 3% decline in purchase money demand led to originators completing the same volume of mortgage applications last week, MBA reported. The refinance share reportedly increased to 47% of total applications from 45% the previous week. |
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