Apps, Rates Rise

The 30-year fixed-rate mortgage averaged 6.62%, up three basis points from a week ago, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks. At this time a year ago, the 30-year averaged 6.52%.

Up 5 BPS from last week, the 15-year averaged 6.30% this week, Freddie said.

“Problems in the nonprime mortgage market where funds are expensive and hard-to-get have not affected the prime conforming market,” said Frank Nothaft, Freddie Mac vice president and chief economist, in the statement.

Near midday, however, the 10-year Treasury note yield was 4.60%, off 19 BPS from a week ago and down 12 BPS for the day.

None of the mortgage “experts” surveyed by Bankrate.com expect mortgage rates to rise over the next 35 to 45 days; 55 percent forecast a downturn over that period, and the rest believed they’d remain relatively unchanged.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 6.35%, reportedly edging up 2 BPS within the past seven days.

At 5.67% this week, the 1-year Treasury-indexed ARM average inched up 2 BPS from a week earlier, Freddie reported. At 4.67% on Tuesday, the yield for the 1-year Treasury bill itself sunk 17 BPS from a week earlier.

The ARM share of mortgage application activity decreased from the previous week to 21%, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug. 10.

The refinance share of total applications was unchanged from the prior week at nearly 40%.

Most ARM borrowers are still choosing to refinance into fixed-rate mortgages, but the widening spread between fixed- and adjustable-rate mortgages in the second quarter made ARMs a bit more attractive than they had been, Freddie said its Refinance Product Transition Report showed. In the second quarter, 85 percent of borrowers who originally had a 1-year ARM and 86 percent who initially had a hybrid ARM chose to refinance into a fixed-rate mortgage, down from 89 percent and 88 percent in the first quarter, respectively.

However, “with the recent contractions in mortgage lending standards and increasing emphasis on underwriting borrowers to fully indexed rates on adjustable-rate mortgages, it is likely that we will see more demand for fixed-rate products for both new home purchases and refinance in the future,” Freddie said in an announcement.

Originators completed 3 percent more applications than in the previous week thanks to an increase of nearly 3 percent in refinance requests and of 4 percent in purchase money application activity, MBA’s application survey showed. Activity was bolstered by applications for government-insured loans — which jumped 7 percent during the week.

But, “recent upheavals in the mortgage industry may be temporarily increasing the level of retail application activity at the large lenders that participate in the MBA survey rather than representing a system-wide increase,” MBA Chief Economist Doug Duncan said in an announcement.