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| Long-term mortgage rates retreated in the face of weakening economy as LIBOR tumbled. Meanwhile, a surge in refinance applications pushed overall activity higher.
The 30-year fixed-rate mortgage averaged 6.14% in Freddie Mac’s survey of thrifts, commercial banks and mortgage lending companies for the week ending Nov. 13. The 30-year was lower than 6.20% a week earlier and 6.24% a year earlier. The average 15-year fixed-rate mortgage was 5.81%, down from 5.88% seven days prior, Freddie said. The decline was the result of a weakening overall economy and a continued improvement in the commercial paper market, Freddie Chief Economist Frank Nothaft said in the survey. The 10-year Treasury yield, which serves as a benchmark for fixed mortgage rates, was 3.758% early today according to Dow Jones & Company Inc., worse than approximately 3.72% a week ago. More than one-third of panelists surveyed by Bankrate.com for the week Nov. 6 to Nov. 12 forecasted a decrease of at least 3 basis points in mortgage rates over the next 35 to 45 days. Less than one-third each projected that rates will either rise or remain dormant. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.98% in Freddie’s latest survey, 21 BPS better than last week. Freddie said the one-year Treasury-indexed ARM averaged 5.33%, climbing from 5.25% last week. The underlying index for the one-year ARM, the yield on the one-year Treasury, closed at 1.03% yesterday, tumbling from 1.22 seven days earlier, according to data from the U.S. Treasury. Another ARM index, the six-month London Interbank Offered Rate, was 2.55% as of Nov. 12, Bankrate.com reported. LIBOR improved 42 BPS from a week earlier. ARMs accounted for 2% of loan applications tracked in the Mortgage Bankers Association survey of mortgage bankers, commercial banks and thrifts for the week ended Nov. 7, down from 3% the previous week. MBA said total mortgage applications rose 12% on a seasonally adjusted basis from the prior week in its latest survey, bringing the Market Composite Index to 425.0. A 16% increase in refinance applications drove the activity, MBA’s data indicated. Refinances accounted for 45% of total applications, up from 43% the previous week. Purchase applications rose 9%, while government activity was 15% higher, MBA reported. |
