|The average ARM neared a three-year high while the share of adjustable rates loans fell to a 16-month low. And the average 30-year fixed rate, which was up from last week, is projected by one economist to stay under 5.7% next year.
Up seven basis points from last week, the 30-year fixed-rate mortgage average came in at 5.73%, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The 30-year, however, is still below 5.98% at this time last year.
In its revised mortgage outlook Tuesday, Fannie Mae predicted the 30-year will average 5.6% this quarter and stay below 5.7% throughout 2006.
But for the next 45 days, half of the mortgage bankers, brokers and other industry “experts” surveyed by Bankrate.com expect rates to rise, while 34% expect rates to stay put.
The average for the 15-year also climbed seven BPS this week to 5.32%, Freddie reported.
Late afternoon Thursday, the 10-year Treasury note yielded 4.27% — up 11 BPS for the day — with a price of 98.78. The scenario was much better a week ago when the figures were 4.17% and 99.56.
According to Freddie, the highest jump was in the 5-year Treasury-indexed hybrid adjustable-rate mortgage average — up 11 BPS from a week ago to 5.26%.
Although the 1-year Treasury-indexed ARM average increased the least, 3 BPS to 4.42% this week, Freddie said its the highest level since the week ending Aug. 2, 2002. The 1-year T-bill, which is reportedly used as the index on roughly half of all ARMs, was 3.66% as of Thursday, rising seven BPS from last week, the Federal Reserve reported.
“As the one-year ARM reaches its highest interest rate level in almost three years, it comes as no surprise that the ARM share, based on number of applications for a mortgage, has fallen noticeably since the beginning of June,” commented Freddie chief economist Frank Nothaft in a written statement.
ARMs were reported to comprise over a third of total mortgage requests early last month.
Currently, the ARM share is at 29%, just barely higher than the previous week’s 16-month low, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, which runs one week behind Freddie’s.
Overall application activity edged up from the prior week due to a 3% improvement in refinance loan requests as purchase money loan applications were unchanged, the MBA said.
The refi share reportedly nudged up from a week earlier to 46%, MBAs announcement said.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. E-mail: [email protected]