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Rates, Apps Edge Lower

Rates, Apps Edge LowerAverage 30-year fixed-rate 6.52%

August 14, 2008


Mortgage rates eased, but so did 1003s.

In its survey of thrifts, commercial banks and mortgage lending companies for the week ended Aug. 14, Freddie Mac reported the 30-year fixed-rate mortgage averaged 6.52% — the same as the prior week and 10 basis points below a year earlier. The average 15-year fixed-rate mortgage was 6.07%, down 3 BPS from the previous week.

Frank Nothaft, Freddie’s chief economist, explained in the statement that rising consumer credit was offset by weaker retail sales, holding rates relatively steady.

The 10-year Treasury yield was 3.90% in early trading, down from 3.99% seven days earlier, CNNMoney reported. The drop suggests fixed-mortgage rates will head lower.’s weekly survey offered no guidance, with 38% of the panelists for the week Aug. 14 to Aug. 20 predicting rates will increase by at least 3 BPS during the next 35 to 45 days, 31% forecasting falling rates and 31% who see no change ahead.

Freddie forecasts the 30-year to average 6.5% this quarter.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 6.02 in Freddie’s survey this week, falling 0.03% from the prior week. The average 1-year Treasury-indexed ARM was 5.18%, down from 5.22% the prior week.

The yield on the 1-year Treasury itself was 2.19% yesterday, down from 2.26% seven days earlier, Treasury data indicate. The yield on the 6-month London Interbank Offered Rate was 3.10% yesterday, 0.01% lower than the prior week, reported. Both the 1-year Treasury and the 6-month LIBOR are used as indices for ARMs, which the Mortgage Bankers Association said accounted for 7% of total applications in its Weekly Mortgage Applications Survey for the week ending Aug. 8, up fractionally from the prior week’s survey.

Overall mortgage applications edged down 2 percent during the latest week, pushing the Market Composite Index down to 425.9, MBA reported. While purchase applications were flat, refinance applications fell 4% during the latest week, nudging the refinance share down to 35% from 36% the prior week.

Government applications rose 3% in MBA’s survey.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of


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