Mortgage Market Continues Improving

The 30-year fixed-rate mortgage averaged 6.14%, slipping 4 basis points from last week and off 23 BPS from the level a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.

“Mortgage rates slid further in the past week to the lowest level this year, as volatility in overseas stock markets led to questions about implications for the US economy,” commented Frank Nothaft, Freddie chief economist, in a written statement. “Uncertainties about the strength of the economy dominated the effects of other indicators, such as January’s personal income growth and core inflation rate measured through the personal consumption report. Both increased at rates faster than had been expected, and potentially would have put upward pressure on interest rates. But the flight to quality due to the stock market’s fall pushed bond yields down instead.”

“Looking ahead, as excess business inventories are worked off and the drag from residential investment diminishes, we expect real GDP growth to accelerate” in the first half of the year,” he added. “That considered, we do not foresee significant movements in mortgage rates, with rates on 30-year fixed-rate mortgages averaging between 6.3 and 6.4 percent for the remainder of the year.”

In the near term, or over the next 35 to 45 days 62 of the 100 mortgage “experts” surveyed by Bankrate.com this week expect rates to fall. Only 23 of the panelists foresaw an upturn and the remaining 15 predicted rates would remain relatively unchanged.

With borrower requests for refinance loans soaring 15 percent over the week ending March 2 and purchase money loan demand edging up 1 percent, overall mortgage application volume came in 7 percent higher than in the previous week, the Mortgage Bankers Association reported on Wednesday. The overall weekly boost also reflected a 7 percent upturn in conventional mortgage applications and 2 percent increase in demand for government loans.

While the ARM share of mortgage activity remained at 21%, the refinance share increased to 46% from 43% a week earlier, MBA said.

Off 6 BPS from a week ago, the 15-year came in at 5.86%, Freddie said.

The 10-year Treasury, a gauge for long-term mortgage rates, was yielding 4.50% late today, up 2 BPS for the day.

The 5-year Treasury-indexed hybrid adjustable-rate mortgages average was reported at 5.90% this week, down 3 BPS from a week earlier.

The 1-year Treasury-indexed ARM averaged 5.47%, edging down 2 BPS from last week, Freddie said. The index itself, or the 1-year T-bill, was at 4.92% on Tuesday, just 1 basis point below a week earlier, according to Federal Reserve data.