Although weekly yields on adjustable-rate mortgages fell more than on fixed-rate loans, ARM rates were higher than fixed rates for only the second time in a quarter century. But rising fixed rates could alter those dynamics.
Easing 0.02% from last week, the average 30-year fixed-rate mortgage was 4.80% in Freddie Mac’s Primary Mortgage Market Survey for the week ending April 23. The 30-year was 6.03% a year earlier.
Freddie said the 15-year fixed-rate average was unchanged from the prior week at 4.48%.
If the 10-year Treasury yield is any indication, fixed mortgage rates will head higher. The 10-year yielded 2.955% during trading today, jumping from 2.801% a week ago.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.85%, 3 basis points lower than the prior survey and “the lowest the 5-year ARM has been since Freddie Mac began tracking it in January 2005.”
The one-year Treasury-indexed ARM saw the biggest weekly improvement, dropping 9 BPS to 4.82%, according to Freddie’s survey.
Freddie’s chief economist, Frank Nothaft, noted in the survey that yields on ARMs have been higher than on fixed-rate mortgages for two consecutive weeks.
“This is the first time this has happened since Freddie Mac began collecting data for ARMs in January 1984,” he said.
Underlying the one-year Treasury ARM is the yield on the one-year Treasury bill, which closed yesterday at 0.52%, off from 0.54% seven days earlier, data from the Department of the Treasury indicated. Another ARM index, the six-month London Interbank Offered Rate, was 1.65% yesterday, edging down 1 basis point from last week, according to Bankrate.com.
Reflecting last week’s increase in the one-year ARM, the share of ARM applications in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending April 17 eased to 1.4% from the prior week’s 1.5%.
MBA’s Market Composite Index, which measures overall 1003 volume, increased of 5 percent on a seasonally adjusted basis to 1172.2.
An 8% increase in refinance activity pushed the refinance share to 80% from 78% seven days earlier, MBA said. Purchase and government applications, however, fell 4%.
