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Mortgage request volume improved as less worry over inflation pushed mortgage rates back down.
The 30-year fixed-rate mortgage averaged 6.24%, down 9 basis points from last week and 13 BPS below the level a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey. Fannie Mae said on Wednesday that it expects the 30-year to average 6.28% this quarter, fall by 5 BPS next quarter and end 2007 at 6.27%. Half the 100 mortgage-industry bankers, brokers and other individuals surveyed by Bankrate.com believe rates will remain relatively unchanged throughout the rest of the year, 30 predicted an upturn and the other 20 forecast a downturn. The 15-year averaged 5.94%, off 10 BPS from a week ago, Freddie said. The gauge for longer-term mortgage rates, the 10-year Treasury note, yielded 4.65% late today, slightly worse than 4.62% last Thursday. The average 5-year Treasury-indexed hybrid adjustable-rate mortgage, reportedly at 6.04%, slipped 4 BPS over the past seven days. The 1-year Treasury-indexed ARM average of 5.53% was 2 BPS lower than last week, Freddie said. This mortgage’s gauge, the 1-year T-Bill, was at 5.04% on Wednesday, off 2 BPS from a week earlier, according to Federal Reserve data. “Both long- and short-term mortgage rates fell this week on early signs that the threat of inflation may be waning,” said Frank Nothaft, Freddie chief economist, in an announcement. “The Producer Price Index and Consumer Price Index for October came in lower than expected and bond yields dropped, pulling mortgage rates lower. “We’ve probably seen the worst of the housing slump, although it may not have entirely bottomed out yet.” Despite a shortened week due to Veterans Day, mortgage application volume improved 4% over the prior week, the Mortgage Bankers Association reported on Wednesday. The improvement came as a result of a 7% jump in refinance requests and a 3% increase in purchase money demand. The refinance share of total applications widened from the prior week to 48%, MBA said, while the ARM share edged down below 26%. Fannie noted that even though refinance activity will fall sharply this year due mortgage rates being the highest in about four years, the recent decline in rates and the large number of ARMs that will reset either this year or next led it to raise its projection upward for 2007 refinancings, although the share will still decline. With total originations expected to reach $2.44 trillion this year and $2.25 in 2007, Fannie projects a decline of 32.4% in refinance loans to $993 billion, with a further fall of 2.8 percent to $965 billion next year, according to its November forecast. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. e-mail: [email protected]