Rates, Apps Worsen

The average 30-year fixed rate mortgage rose six basis points (BPS) from the prior week to 5.85%, according to the survey of 125 thrifts, commercial banks and mortgage lending companies by Freddie Mac. A year ago, the 30-year was 6.99%.

“With the conflict in Iraq seemingly under control, the financial markets have shifted focus back onto the economy,” said Freddie’s economist Frank Nothaft. He noted that the markets discovered we seem to be in another ‘soft spot.’

Freddie reported the average 15-year fixed rate at 5.17%, 9 BPS higher than last week. The average one-year adjustable rate mortgage (ARM) was down slightly to 3.80%.

Reflecting the recently rising rates, loan applications edged down a little more than a percent from the prior week, according to the survey of mortgage bankers, commercial banks and thrifts by the Mortgage Bankers Association of America (MBA). Refinance applications were off about five percent, while purchase applications rose to 400.8 from 364.7. Refinances made up 70% of all applications.

42% of Bankrate.com’s survey respondents expect rates to fall, while another 42% see no change.

Freddie’s Nothaft said mortgage rates are expected to remain low during the second half of this year.