|Application activity reversed its descending trend, while inflationary pressures pushed long-term rates great lengths once again and have the 30-year just below the 6% mark.
The 30-year fixed-rate mortgage average soared 10 basis points from the prior week to 5.95% for the week ending March 17, according to Freddie Mac’s Primary Mortgage Market Survey, and it stands a whopping 57 BPS above the average a year ago.
Up 9 BPS from last week, Freddie said the 15-year average came in at 5.47%.
The 5-year Treasury-indexed adjustable-rate mortgage also shot up by 9 BPS to 5.31%.
“Oil prices hit a record high while inventory of gasoline and heating oil was lower than expected,” said Amy Cutts, Freddie’s deputy chief economist, in a written statement. “This raises the fear of inflation, which kept continued upward pressure on interest rates and helped fuel the rise in mortgage rates for the fifth continuous week.“
Although signs don’t point to a downturn, they indicate the 30-year may not be making the hikes it has made lately — the latest forecast by the Mortgage Bankers Association has it averaging 6.0% next quarter and rising to 6.6% until year-end.
Half of this week’s surveyed panel of 100 industry bankers, brokers and individuals, seemed to agree with the MBA as they predicted rates will stay relatively unchanged over the next 30 to 45 days, while one-third forecasted a rise and only 12% believed rates would decrease.
Going a different route than long-term rates, the 1-year Treasury-indexed ARM reportedly dropped 4 BPS within the past seven days to 4.20%. But, it won’t continue in this path for long, according to the MBA, which has it averaging 4.6% next quarter and 5.0% by the end of the year.
After dropping for the past four weeks, application volume rose 3% for the week, pushing the Market Composite Index up to 727.6, according to the MBAs latest application survey. MBAs report reflects activity that is 1 week older than rates reported by Freddie — likely resulting in fewer applications to be reported next week. At this time last year, the index was at 1117.1 — the highest level since July 2003 when rates were coming off bottom lows.
An uptick of nearly 3% in the Purchase Index and a 4% increase in refinance requests spurred overall application activity.
The MBA noted that the ARM index increased almost 10 percent last week while the fixed rate index jumped almost a quarter of a point to 5169.9 — the highest level since mid-December 2004.
Accordingly, while the refinance share of applications remained at 43%, the ARM share rose to 32% from the previous week.
The closely watched 10-year Treasury-note was trading at 96.0 early Friday, off 0.25. The yield, which moves inversely to the price, was up 4 BPS to 4.50%.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.email: firstname.lastname@example.org
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