|As worries of inflation eased, mortgage activity picked up steam — with the biggest balance borrowers rushing to refinance.
The 30-year fixed-rate mortgage average fell six basis points within the past week to 5.65% — the lowest level since mid-February, according to Freddie Mac’s latest Primary Mortgage Market Survey.
Freddie chief economist Frank Nothaft suggested declining rates were due to inflation being contained. This week’s release of the May Federal Open Market Committee minutes “reinforced the notion that inflation in the economy in the first three months of the year was contained and upward price pressure in the near-term seems unlikely,” he said.
The majority (60%) of Bankrate.com’s surveyed panel of 100 mortgage “experts,” however, believed rates have bottomed out and are likely to rise over the next 35 to 45 days, while the rest predicted rates would remain about the same.
The average for the 15-year also had a weekly decline of six BPS to 5.21%, Freddie said.
At this time last year, the spread between the two long-term rates was reportedly 0.63% — wider than the current 0.44%.
Unchanged from last week, Freddie said the 5-Year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.07%.
The 1-year Treasury-indexed ARM came in at 4.21%, sliding five BPS within the past seven days.
As of Tuesday, the 1-year Treasury Bill was 3.32%, according to the latest Federal Reserve Statistical Release. The bill, also known as the 1-year constant maturity Treasury index, is reportedly used roughly on half of all ARMs.
The 10-year Treasury-bond was trading at 100.31 late Thursday, unchanged from the prior day and slightly higher than reported a week ago. The yield on the 10-year, at 4.08%, is slightly below 4.10% a week ago.
The ARM share edged up from the prior week and currently sits at about 35% of total mortgage applications, according to the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey.
Application activity improved slightly — as evidenced in the 4% increase from the previous week to 729.6 in the Market Composite Index reported by MBA. Purchase requests rose 3%, but more mortgage prospects applied for refinance loans.
“Rates have declined 14 basis points over the last two weeks,” noted Jay Brinkmann, MBAs research and economics vice president. “While the number of refinance applications increased 6.5 percent last week, the dollar volume increased by more than twice that amount, 13.5 percent, consistent with the idea that borrowers with larger balance loans respond quickly to even small rate incentives to refinance.”
Accordingly, the refi share nudged up from the prior week to 40% of total applications, MBA reported.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]