Fixed Rates Worsen

Climbing 6 basis points from a week ago, the 30-year fixed-rate mortgage average came in at 6.21%, Freddie Mac said the responses of its latest survey of 125 mortgage-lending companies, thrifts and commercial banks showed. A year ago, the 30-year averaged 6.60%.

The 15-year averaged 5.92%, increasing 5 BPS from last week, Freddie reported.

“Mortgage rates inched up this week following the Federal Open Market Committee statement reiterating that the predominant concern remains the risk that inflation will fail to moderate as expected,” Freddie commented in a written statement. “However, as long as core inflation continues to trend downward and economic growth remains sub-par it is unlikely that we will see any big movement in mortgage rates.”

But, according to almost half of the 100 mortgage industry “experts” surveyed by Bankrate.com this week, rates will continue upward in the next 35 to 45 days. Nearly a third believed rates will remain relatively unchanged and close to a quarter foresaw a decrease.

The Mortgage Bankers Association agreed that rates will rise. The trade group’s latest outlook has the 30-year averaging 6.4% this quarter and rising by 10 BPS in each of the following quarters to end the year at 6.6%. Last month, MBA predicted the 30-year would finish the year at 6.5%.

Meanwhile, the benchmark for fixed mortgage rates, the 10-year Treasury note yield, was 4.75% in afternoon trading today, worse than 4.66% last Thursday.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.92%, or 3 BPS higher than a week ago, Freddie reported.

There was no change from last week in the 1-year Treasury-indexed ARM average, staying at 5.48%. However, the 1-year T-bill itself moved down to 4.85% on Tuesday from 4.91% a week earlier, Federal Reserve data showed.

The share of ARM applications edged down from the previous week to 17%, MBA reported on Wednesday.

Overall residential loan application volume fell by 1 percent during the week ending May 11, as a result of a 1% downturn in purchase money application activity and a slight decrease in refinance requests, MBA added.

Nonetheless, the refinance share of mortgage applications reportedly edged up from the prior week to over 42% and the average pace of applications for home purchases over the first two weeks in May was the strongest since January 2006.