Record ARM Activity

The 30-year fixed-rate mortgage averaged 6.04%, according to Freddie Mac’s latest Primary Mortgage Market Survey, up 3 basis points from last week. At this time last year, it was at 5.52%.

The 15-year reportedly gained 2 basis points to average 5.58%.

Shorter-term rates saw bigger weekly increases — with the 5-year Treasury-indexed adjustable-rate mortgage leaping 8 BPS to 5.43% and the 1-year jumping 9 BPS to 4.33%, Freddie said.

“Financial markets currently are very inflation sensitive, putting upward pressure on mortgage rates,” commented Frank Nothaft, Freddie’s chief economist, in an announcement. “However, several economic indicators suggest that the economy isn’t overheating and that inflation is relatively contained.“

“Looking ahead into the spring home buying season, we don’t expect mortgage rates to rise too much or too quickly in the near term,” he added.

Sixty percent of the panel of 100 industry “experts” surveyed at Bankrate.com this week seemed to be on the same train of thought, believing rates would remain unchanged (plus or minus 2 BPS) for the next 35 to 45 days, while the rest were split equally among those who expect rates to rise (20%) and those who think rates will fall (20%).

More mortgage hunters looking to move into a new home made it to originators’ shops last week, making the stack of 1003s grow 2% — with purchase requests up 6% and refinance applications down 2%, the Mortgage Bankers Association reported. The 674.3 Market Composite Index, a measure of application volume, is however still way below the 1091.3 a year ago. MBA’s application survey runs one week behind Freddie’s.

The ARM share of applications jumped from the previous week to an all-time high of 37%, MBA said, while the refi share fell below 38%.

“Rates on 30-year fixed-rate mortgages have increased 34 basis points in the last month,” said MBA survey director Mike Cevarr. “Following this increase in rates, the market attained a record high ARM share this week, both in terms of number of loans and dollar volumes.”

Early Friday, fueled by a lower than expected employment increase, the 10-year Treasury yield was down 4 BPS to 4.44%. The price was up 0.31 to 96.47.