Mortgage rates declined for the first time in four weeks. Meanwhile, the share of borrowers opting for an adjustable rate has risen for six consecutive weeks.
In its survey of 125 thrifts, commercial banks and mortgage lending companies for the week that ended June 18, Freddie Mac reported the average 30-year fixed-rate mortgage at 5.38%, decreasing for the first time since May 21 — when it stood at 4.82%. The 30-year was 5.59% in the prior survey and 6.42% a year earlier.
Freddie said the average 15-year fixed-rate mortgage was 4.89%, 17 basis points better than seven days prior.
The secondary lender’s chief economist, Frank Nothaft, said tame inflation pushed rates lower.
If the 10-year Treasury bond is any indication, mortgage rates might head lower. The 10-year yielded 3.816% this afternoon, lower than 3.930% the prior Thursday.
The majority of Bankrate.com’s 100 panelists surveyed for the week June 18 to June 24 predicted rates will fall at least 0.03% during the next 35 to 45 days, while more than one-quarter forecasted no change and one-fifth projected an increase.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.97%, 20 BPS better than the previous week, according to Freddie’s survey.
But the one-year Treasury-indexed ARM averaged just 9 BPS less than a week earlier at 4.95%. Data reported by the U.S. Department of the Treasury indicated the underlying one-year Treasury bill yield fell to 0.50% yesterday from 0.55% a year earlier.
The six-month London Interbank Offered Rate was 1.16% as of yesterday, Bankrate.com reported. LIBOR, which is the index on a big share of outstanding subprime ARMs, was 1.27% seven days prior.
In its Weekly Mortgage Applications Survey for the week ended June 12, the Mortgage Bankers Association reported that ARM share increased to 4.3% from 3.4% in the previous survey. ARM share has risen each week since MBA’s survey for the week ended May 1 — when it was 2.1%.
The increase in ARM share often accompanies periods where rates are rising from recent lows as borrowers and originators try to mitigate the impact of rising rates.
MBA reported that overall loan applications during the latest week declined 16% on a seasonally adjusted basis from the previous week — reflecting last week’s surge in mortgage rates. The Market Composite Index ended the week at 414.4.
Refinance applications were off nearly one-quarter, pushing the refinance share down to 54% from the previous week’s 59%, MBA said. Purchase applications were down a more moderate 4%.
