|The 30-year fixed rate fell to its lowest level since February while 1003 applications are up by more than half from a month ago and expected to continue higher. Meanwhile, the 1-year Treasury yield spiraled down more than a half percent.
Tumbling 15 basis points from last week, the average 30-year fixed-rate mortgage was 5.78% in Freddie Mac’s survey of thrifts, commercial banks and mortgage lending companies for the week ended Sept. 18. A year earlier, the average 30-year was 6.34%.
The 30-year stands at its lowest point since the week ended Feb. 14, when it averaged 5.72%.
In its September Economic and Housing Market Outlook, Freddie predicted the 30-year will average 6.3% this quarter then fall to 5.9% in the fourth quarter — where it will stay until the third quarter of next year.
The 15-year fixed-rate average was 5.35% — the lowest it’s been since March 27, Freddie reported. The 15-year fell from 5.54% seven days earlier.
The 10-year Treasury yield, which is tracked by fixed mortgage rates, was 3.42% early today — sinking from 3.61% a week prior.
Panelists at Bankrate.com — which correctly predicted the latest decline in last week’s survey — weren’t as clear in the survey for the week Sept. 17 to Sept. 23. Less than half forecasted a decrease of at least 3 BPS over the next 35 to 45 days, 40% projected an increase and 13% saw no change ahead.
Freddie said the 5-year year Treasury-indexed hybrid adjustable-rate mortgage was 5.67%, higher than the 15-year fixed rate but down 20 BPS from the prior week.
The 1-year Treasury-indexed ARM fell 0.18% to 5.03%, Freddie’s survey indicated. Subsequent to a loan closing, the 1-year ARM moves with the 1-year Treasury yield, which stood at 1.50% yesterday, crashing from 2.06% the prior Wednesday.
The 6-month London Interbank Offered Rate, which is also used as an ARM index, fell to 3.02% as of yesterday, according to Bankrate.com. A week earlier, LIBOR stood at 3.10%.
ARMs accounted for just 4% of applications tracked by the Mortgage Bankers Association in its survey for the week ended Sept. 12, falling from 6% the previous week.
MBA said mortgage applications jumped 33% on a seasonally adjusted basis in its latest survey from the prior week, bringing the Market Composite Index to 661.7. Applications, however, were off 1% from a year earlier.
Freddie’s chief economist, Frank Nothaft, noted overall applications were up nearly 58% from Aug. 15.
While purchase applications edged just 2% higher in the latest week, the overall increase in applications was driven by an 88% surge in refinances — which were at more than twice the level they stood at two weeks earlier. The strong activity pushed the refinance share of mortgage activity to 52 percent from 36 percent in the prior survey.
MBA’s Associate Vice President of Economic Forecasting Orawin Velz said, “We expect to see meaningful increases in mortgage demand in coming weeks on both the purchase and refi sides.”
Government loan applications, which MBA said are largely FHA, fell for the second straight week and were down 5% from last week.
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