|Mortgage shops generated more traffic as long-term mortgage rates continued decreasing on U.S. employment data. Rates on jumbo loans and adjustable rates, however, worsened.
Falling for the third consecutive week, the 30-year fixed-rate mortgage averaged 6.59%, tumbling 9 basis points below the level last week, according to Freddie Mac’s latest Primary Mortgage Market Survey. At this time a year ago, the average was 6.55%.
Rates for prime conforming fixed-rate loans eased as “job creation fell short of market expectations, with 92,000 jobs added in July, the smallest gain since February, and June’s number was revised down by 6,000,” Freddie said in an announcement.
The panel of mortgage “experts” surveyed by Bankrate.com was almost evenly split on where rates will head over the next month and a half: 38% forecast a downfall, another 31% foresaw a rise, and the remainder predicted they’d remain relatively unchanged.
For the rest of the year, however, Freddie expects 30-year fixed-mortgage rates to average between 6.6% and 6.9%, according to an announcement.
The 15-year averaged 6.25%, reportedly falling 7 BPS from a week ago.
The 10-year Treasury note yielded 4.79% near midday, not much higher than 4.77% reported a week ago.
In opposite direction of long-term rates, the 5-year Treasury-indexed hybrid adjustable-rate mortgage average climbed 4 BPS to 6.33% this week, Freddie said.
The 1-year Treasury-indexed ARMs average also rose from last week, by 6 PBS to 5.65% — where Freddie expects it to linger for the remainder of the year. The 1-year Treasury bill itself yielded 4.84% on Tuesday, 1 BPS lower than a week earlier, Federal Reserve data showed.
ARMs represented nearly 23% of total mortgage applications for the week ending Aug. 3, up from 22% a week earlier, the Mortgage Bankers Association reported on Wednesday.
Borrowers on loans in excess of the conforming limit of $417,000 are seeing much higher rates “as investors command a bigger mark-up for loans that come without any guarantees against default,” according to Bankrate.com.
Jumbo fixed rates increased by 0.25% or more last week, Freddie said. And over the past two weeks, the spread between the average conforming and jumbo fixed rates widened by 41 BPS to 0.69%, Bankrate.com reported.
In looking at adjustable mortgage rates, some hybrid ARM rates jumped this week to levels higher than a fixed rate loan, Bankrate.com added. That was the case in the average 7/1 and 10/1 ARM rates, which were at 6.67% and 6.81% this week, respectively.
Overall mortgage application volume jumped 8% above the prior week, reflecting a surge of 9% in refinance applications and a 7% increase in purchase money demand, MBA said. Application activity for government-insured loans soared by 9 percent while for conventional mortgages leapt 8%.
The refinance share of total applications reportedly edged up from the previous week closer to 40%.