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| Refinance requests rose to the highest level in almost two years as rates improved for the second consecutive week.
The 30-year fixed-rate mortgage averaged 6.18%, sliding 6 basis points from last week and 10 BPS lower than the level a year ago, Freddie Mac said in its latest Primary Mortgage Market Survey showed. This is the lowest the reported average has been since Jan. 26, 2006. “Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought,” said Freddie Chief Economist Frank Nothaft in a written statement. “Slower growth usually means less inflation and less inflation means lower interest rates. Hence, the drop in mortgage rates this week.” For the next 35 to 45 days, rates will remain relatively unchanged, according to 50 of the 100 panelists Bankrate.com surveyed this week. Of the remaining half, 30 predicted mortgage rates will rise over that period, and the rest forecast a downturn. For the quarter, the Mortgage Bankers Association’s November outlook has the 30-year averaging 6.3%. The group forecast it will then rise by 10 BPS in each of next year’s first three quarters to 6.6%, where it will stay through mid-2008. The 15-year average, at 5.91%, was off 3 BPS from a week earlier, Freddie said. The 10-year Treasury note yielded 4.56% near midday with a price of 100.44. About a week ago, it yielded 4.65%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage reportedly fell 5 BPS during the week to 5.99%. At 5.49%, the average for 1-year Treasury-indexed ARMs was off 4 BPS from last week, Freddie reported. The 1-year Treasury bill was at 5.02% on Monday, off 1 BPS from a week earlier, the Federal Reserve said. Despite improved rates, overall mortgage application volume fell 4% over the week ending Nov. 17, MBA reported on Wednesday. The decline reflected a 4% downturn in refinance requests and a 3% decrease in purchase money loan applications. The refinance share, however, edged up from the prior week to 49% — the highest level since February 2005 — and the ARM share remained unchanged at 26%, MBA said. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. e-mail: [email protected]
