Rates Reach 6 Month Low

The 30-year fixed-rate mortgage averaged 6.20%, down 4 basis points from a week ago, Freddie Mac said its latest Primary Mortgage Market Survey showed. At this time a year ago, the average was 6.18%.

The 15-year average reportedly slid 5 BPS from last week to 5.83%.

The yield on the 10-year Treasury note, at 4.00% near midday, improved from 4.15% late last Thursday.

“Both the producer price index and the consumer price index remained contained in October while industrial production fell,” said Frank Nothaft, Freddie’s chief economist. “This allowed interest rates for the 30-year FRM to decline to the lowest levels since early May 2007 and the 15-year FRM to fall to a level not experienced since early last year.”

Nonetheless, Fannie Mae expects the 30-year will move up from its current level to average 6.27% this quarter and then crawl up to 6.30% in the second quarter 2008, according to the company’s November forecast.

Tumbling 8 BPS, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.88% this week, Freddie said.

Also down 8 PBS from a week ago was the 1-year Treasury-indexed ARM, which averaged 5.42%, Freddie reported. The yield on the 1-year Treasury bill itself was 3.43% on Monday, sinking 25 BPS from Nov. 13, according to Federal Reserve data.

For the quarter, Fannie said it expects the 1-year ARM to average 5.37% and reach 5.40% — where it is forecast to stay through the last quarter of next year.

The ARM share of total mortgage applications remained at 16% for the week ending Nov. 16, according to the Mortgage Bankers Association’s latest Weekly Mortgage Application Survey.

Overall, originators completed 4 percent fewer applications from the prior week, as demand for refinances dropped 5% and purchase money application activity edged down 2%, MBA reported. Application activity for government-insured loans ticked down 1 percent.

Refinances continued to account for half of all mortgage applications, MBA said.