The lowest mortgage rates since the 1950’s will probably be higher in next week’s reports. Business has accelerated at both mortgage broker shops and mortgage banking firms as refinance activity has been reinvigorated. But a steep decline in first-quarter refinances is projected.
The latest record to be shattered was the 30-year fixed-rate mortgage, which averaged 4.19 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. It was the lowest level recorded by Freddie and the lowest level since 1948 based on a data series of FHAÂ rates dating back to 1948. The 30-year was 4.27 percent a week earlier and 4.92 percent a year earlier.
The 30-year will average 4.4 percent this quarter, the same as it averaged in the third quarter, Freddie predicted in its October outlook. The 30-year will edge up to 4.5 percent in the first-quarter 2010.
The Mortech-Mortgage Daily Mortgage Market Index report for the week ended Oct. 13 indicated that the spread between the jumbo 30-year mortgage and the conventional 30-year widened to 95 basis points from the previous week’s 92 BPS.
While the 30-year mortgage rate was down 8 BPS from last week, the yield on the 10-year Treasury note jumped 11 BPS from last Thursday to close at 2.52 percent today, according to data published by the U.S. Department of the Treasury. The disparate movement suggests the 30-year fixed-rate mortgage could rise as many as 19 BPS in next week’s reports.
The majority of panelists surveyed by Bankrate.com for the week Oct. 14 to Oct. 20 expected mortgage rates will not move more than 2 BPSÂ during the next week or so. But 29 percent forecasted a rise and 12 percent predicted a decline.
The 15-year also set a record in Freddie’s survey, falling from 3.72 percent last week to 3.62 percent.
It was the third consecutive week that fixed-rates were at all-time lows.
There was no change in the five-year Treasury-indexed adjustable-rate mortgage, which averaged 3.47 percent in Freddie’s report. Still, it was the lowest level on record with Freddie.
The one-year Treasury-indexed ARM broke no records, though. The one-year averaged 3.43 percent in Freddie’s survey, 3 basis points higher than last week but 117 BPS lower than the same week in 2009. Freddie projects that the one-year will average 3.5 percent in the fourth quarter then rise to 3.6 percent.
The underlying index for the one-year ARM, the yield on the one-year Treasury, fell 1 basis point from last week to 0.22 percent today, the Treasury reported.
It was the second week of no movement for the six-month London Interbank Offered Rate, which was 0.46 percent Wednesday based on rates reported by Bankrate.com. LIBORÂ is widely used on many outstanding subprime ARMs.
The Mortgage Bankers Association reported that ARM share fell to 5.4 percent in its survey for the week ended Oct. 8 from the prior week’s 6.1 percent. Freddie’s outlook had ARM share at 6 percent during the final three quarters of 2010 then increasing to 7 percent.
New mortgage broker activity this week was 11 higher, according to the Mortgage Market Index. The average U.S. loan amount rose to $222,567 from the previous week’s $214,657. Hawaii’s $287,943 average loan amount was highest, while North Dakota’s $136,575 was lowest.
MBA’s report indicated that last week’s applications taken by mortgage bankers rose 15 percent on a seasonally adjusted basis from a week earlier. Refinance activity was 21 percent higher and purchase business rose 9 percent.
Refinance share expanded to 63 percent this week from 59 percent last week in the Mortech-MortgageDaily.com report. This week’s share included a 49 percent rate-term share and a 14 percent cashout share.
Freddie projected refinance share of applications, which was 80 percent in the third-quarter, will ease to 70 percent this quarter and drop to 55 percent in the first quarter of next year.
