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| Rates upticked this week, bringing down mortgage activity, and will keep climbing gradually — with both the 30-year fixed and 1-year ARM expected to end next year about 40 BPS above their current levels.
The 30-year fixed-rate mortgage averaged 5.81%, up six basis points from last week, according to Freddie Mac’s latest Primary Mortgage Market Survey of 125 thrifts, commercial banks and mortgage lending companies. The figure is four BPS below the level a year ago. The 30-year averaged 5.84% in 2004 — reportedly the second lowest annual rate ever recorded in the 32-year history of Freddie’s survey. The Mortgage Bankers Association’s latest forecast has the 30-year averaging 5.9% next quarter, at 6.1% in the second quarter and ending the year at 6.3%. The average for the 15-year at 5.23% rose five BPS during the week, Freddie said. The 1-year Treasury-indexed adjustable-rate mortgage average of 4.19% reportedly nudged up two BPS. Meanwhile, the ARM share of total mortgage applications edged down to below 34%, the MBA said. MBA expects the 1-year ARM to average 4.3% during the first half of the 2005 and end next year at 4.7%. At Bankrate.com, 57% of the surveyed panel of 100 mortgage brokers, bankers and individuals predicted rates would not change (plus or minus two BPS) during the next 45 days, while the rest saw rates being rising (29%) or falling (14%). During the shortened Christmas week, MBA said mortgage activity decreased about 2%, bringing the Market Composite Index to 677.4. However, activity is higher than a year ago when the index stood at 574.1. The week-to-week decline in overall applications was driven by an 8% downturn in refinance requests, which offset the 3% increase in purchase money apps, and tugged down the refinance share of total applications to 46%. In midmorning trading, the 10-year Treasury-note was yielding 4.25%, down 7 BPS from Wednesday, while the price of 99.94 was up 0.56. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]
