|The spread between short- and long-term rates widened amid data indicating future steady economic growth. Meanwhile, mortgage requests fell.
The 30-year fixed-rate mortgage averaged 6.25%, up two basis points from last week and 13 BPS higher than a year ago, according to Freddie Mac’s latest survey of 125 mortgage bankers, commercial banks and thrifts.
The 15-year, at 5.98%, was unchanged from a week ago, Freddie said.
The 10-year Treasury note yielded 4.87% late today — 13 BPS higher than last Thursday.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly stepped down 4 BPS over the week to 6.00%.
The 1-year Treasury-indexed ARM averaged 5.49%, or 2 BPS lower than last week, Freddie reported. The yield on the 1-year Treasury bill, however, crept up 1 BPS from a week earlier to 5.09% on Wednesday.
“Mortgage rates were mixed this week on news that December’s leading indicators, a measure of future economic activity, signaled steady growth in the coming months,” but a flurry of reports in the coming week will provide further readings on economic strength, said Frank Nothaft, Freddie chief economist, in the announcement.
“Primary among these will be the first estimate of fourth quarter GDP growth, and we could see interest rates change in response,” he added. “Also, Fed monetary policy makers will convene over the 30th and 31st next week and decide on whether to adjust the target short-term interest rate as well.”
Bankrate.com said 45 of the 100 mortgage “experts” it surveyed this week forecast that mortgage rates will rise over the next 30 to 45 days, one-third expected them to remain relatively unchanged and the rest foresaw a downturn.
In a longer-term outlook by Fannie Mae, the 30-year is expected to linger around its current level all year long and rise above 6.3% during the fourth quarter 2008. The Mortgage Bankers Association, however, sees the 30-year at 6.5% in the second half of this year.
During the week ending Jan. 19, mortgage application volume dropped 8 percent, reflecting a decrease of 10 percent in refinance requests and a downturn of 8 percent in purchase money loan demand, MBA said.
The refinance share and ARM share of applications edged down from the previous week to 48 percent and 20 percent, respectively.
After a falloff of 29% in 2006 in the refinance originations that stemmed from the highest level of mortgage rates in about four years, Fannie projects such activity will be little changed this year in response to “a significant amount of refinancings out of upward-adjusting ARMs,” but expects purchase originations to drop 11.2% from last year.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.e-mail: MortgageWriter@aol.com
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