Rates Mixed, Apps Firm

The average 30-year fixed-rate mortgage slipped 7 basis points from last week to 6.40%, Freddie Mac revealed in its survey of thrifts, commercial banks and mortgage lending companies for the week ended Aug. 28. At this time last year, the 30-year averaged 6.67%.

The average 15-year fixed-rate mortgage also fell 7 BPS from last week, to 5.93%, the report indicated.

Freddie Chief Economist Frank Nothaft noted that reports of persistent economic weakness help push rates lower, with July’s leading economic indicators falling more than expected and manufacturing slowing in both the Philadelphia and Richmond regions.

Fixed mortgage rates tend to move with the 10-year Treasury yield, which stood at 3.81% near midday, according to Yahoo Finance. The 10-year yielded 3.84% last week.

Panelists surveyed by Bankrate.com for the week Aug. 28 to Sept. 3 offered no indication of where mortgage rates are headed, with 36 projecting that rates will increase by at least 3 BPS during the next 35 to 45 days, 36 forecasting no change and 28 expecting rates to fall.

The 5-year Treasury-indexed hybrid ARM averaged 6.03% in Freddie’s survey, off 0.04% from a week earlier.

The average 1-year Treasury-indexed ARM, however, increased 4 BPS over the past seven days to 5.33%, according to Freddie’s survey.

Nothaft explained the increase in the 1-year occurred “after the Federal Reserve’s Open Market Committee hinted it might increase the overnight bank lending rate in its August 5th minutes.”

The underlying index on the 1-year ARM, the 1-year Treasury yield, was 2.16% yesterday, 10 BPS higher than a week earlier, according to data from the U.S. Treasury Dept. Another ARM index, the 6-month London Interbank Offered Rate, or LIBOR, was 3.17% yesterday, rising from 3.13% a week earlier, Bankrate.com reported.

In its Weekly Mortgage Applications Survey for the week ending Aug. 22, the Mortgage Bankers Association reported ARM applications accounted for 8 percent of overall 1003s. ARM share was mostly unchanged from the prior week.

MBA said overall applications edged higher on a seasonally adjusted basis, bringing the Market Composite Index to 421.6. Purchases applications increased nearly 1%, while refinances were up fractionally. The refinance share was also up fractionally, to 35%.

Government loan applications increased 3 %, MBA said. This marks the fourth consecutive week of increases in government activity.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com