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| Mortgage rates continued to tumble — with the 15-year fixed-rate falling below 5%. Meanwhile, refinance activity surged for the third consecutive week.
The 30-year fixed-rate mortgage averaged 5.48%, according to Freddie Mac’s survey of 125 thrifts, commercial banks and mortgage lenders for the week ending Jan. 24. The 30-year dropped 21 basis points from the prior week and was 77 BPS lower than a year earlier. Freddie noted the 30-year is at its lowest level since March 25, 2004. In its latest economic outlook, Freddie projects the 30-year will average 6.2% this quarter, then rise to 6.6% by the third quarter. Longer range quarterly forecasts call for the 30-year to bounce between 5.9% and 6.4% through next year. The average 15-year fixed rate was 4.95%, down 26 BPS from a week earlier, Freddie reported. The steep decline was attributed to weak housing data and the “extraordinary” federal funds rate cut by the Federal Reserve on Tuesday. The 10-year Treasury yield was 3.63% near midday, almost unchanged from one week ago, according to CNNMoney.com. The 10-year had been much lower on Tuesday after a world-wide selloff in stocks and a massive reduction of 75 BPS in the federal funds rate target announced by the Federal Open Market Committee. Stocks have mostly rallied since then, pushing the yield higher. Nearly two-thirds of the mortgage bankers, mortgage brokers and other industry “experts” surveyed by Bankrate.com this week expect rates to increase over the next 45 days, while just over a quarter project rates to fall. The rest see no changes ahead. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.13%, dropping from 5.40% a week earlier, according to Freddie’s survey. The 1-year Treasury-indexed ARM was 4.99%, down from 5.26% a week earlier, Freddie said. The 1-year Treasury yield itself was 2.19% yesterday — 67 BPS lower than a week ago, according to U.S. Treasury data. The 6-month London Interbank Offered Rate, or LIBOR, was 3.49%, down 34 BPS from last week, Bankrate.com reported. Despite that the 15-year fixed-rate average was lower than the 1-year ARM, the share of ARM applications nudged up to 9.3%, according to the Mortgage Bankers Association survey of mortgage bankers, commercial banks and thrifts for the week ending Jan. 18. Loan application activity was up 8% from the prior week, according to MBA’s Market Composite Index, which was 981.5. Refinance applications, which accounted for two-thirds of the latest week’s applications, were up 17% for the week — the third consecutive weekly increase. Purchase applications were down 5%. |
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Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com. e-mail:Â mtgsam@aol.com |
