Rates Improve

The 30-year fixed-rate mortgage averaged 6.31%, tumbling 9 basis points from a week ago and unchanged from a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.

Fannie Mae’s latest forecast indicates the 30-year average will stay at or near its current level from now through 2007. The Mortgage Bankers Association’s most recent outlook, however, has the average at 6.5% this quarter and lowering to 6.4% next quarter before starting back up in the second quarter 2007 to end the year at 6.7%.

Forty-four of the 100 mortgage “experts” surveyed by Bankrate.com this week predicted rates will fall over the next 35 to 45 days, one-third foresaw an upturn and the rest predicted they’ll be relatively unchanged.

The 15-year averaged 6.02%, dropping 8 BPS from last week, Freddie said.

Late today, the 10-year Treasury bond yielded 4.59%, tumbling from 4.71% a week earlier.

The average 5-year Treasury-indexed hybrid adjustable-rate mortgages reportedly fell 9 BPS during the past seven days to 6.05%.

Meanwhile, this week’s 5.53% average for 1-year Treasury-indexed ARMs was 7 BPS lower than last week, Freddie said. The 1-year T-Bill itself was at 4.99% Tuesday, plunging 11 BPS from a week earlier, according to Federal Reserve data.

“Lower than expected third quarter Gross Domestic Product figures helped to put a damper on rising rates this week,” said Frank Nothaft, Freddie chief economist, in a written statement. “With mortgage rates down this week, we may see a spurt of refinancing by those who want to get out of ARMs that are scheduled to reset in the next year while interest rates are still comparatively low.”

For the week ending Oct. 27, however, refinance requests fell by 5% while purchase money loan demand decreased 2%, leading to an overall mortgage application volume decline of 3%, MBA reported Wednesday.

The refinance share of applications edged down from the prior week to 45% and the ARM remained at 26%, MBA added.