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Rates, Apps Improve

The one-year adjustable-rate mortgage and 30-year fixed-rate mortgage tumbled more than 10 basis points over the past week as refinance applications jumped.

Falling 12 BPS from last week, the average 30-year fixed-rate mortgage was 5.20% in Freddie Mac’s Primary Mortgage Market Survey for the week ended July 9. A year earlier, the 30-year was 6.37%.

The decline was tied to a weak labor report, Freddie Chief Economist Frank Nothaft explained.

“The economy lost 467,000 jobs in June, more than the market consensus, and the unemployment rate rose to 9.5%, the highest since August 1983,” Nothaft stated in the report. “Moreover, hourly employee wages increased at an annual rate of 0.7% on average in the second quarter of 2009, the smallest gain since records began in 1964.”

The average 15-year fixed-rate mortgage slipped a more moderate 8 BPS from the previous week to 4.69%, the survey said.

The yield on the 10-year Treasury note, an indication of where mortgage rates are headed, was 3.399% near midday, lower than around 3.491% a week earlier.

A plurality of the panelists surveyed by for the week July 9 to July 15 predicted mortgage rates would hover within 2 BPS of their current levels during the next 35 to 45 days, while 37% projected a decline and 19% expected an increase.

Off just 6 BPS, the five-year Treasury-indexed hybrid ARM averaged 4.82%, according to Freddie.

Also coming in at 4.82% was the one-year Treasury-indexed ARM, which tumbled 12 BPS, Freddie reported. The underlying index — the yield on the one-year Treasury bill — fell to 0.45% yesterday from 0.54% one week earlier.

The six-month London Interbank Offered Rate was reported at 1.02% as of July 8 by LIBOR, a popular subprime ARM index, was 1.11% as of July 1.

ARMs accounted for 4.4% of applications in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended July 3, slightly above 4.3% seven days earlier.

Overall applications, after being adjusted for the July 4th holiday, improved 11% from the prior week — pushing MBA’s Market Composite Index to 493.1.

A 15% increase in refinance applications fueled the increase and pushed the share of refinances to 48% from the prior week’s 46%. Purchase applications rose 7%.

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