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15-Year Falls Below 5%


15-Year Falls Below 5%Average 30-year 5.48%

January 24, 2008


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 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 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, 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%.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of


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