30-Year Cracks 6%

Rising five basis points within the past week, the 30-year fixed-rate mortgage average came in at 6.03%, according to the announcement of Freddie Mac’s latest Primary Mortgage Market Survey. The 30-year hasn’t been above six percent since March.

The average for the 15-year was reported at 5.62%, eight BPS higher than a week ago.

Last year at this time, the spread between the 30-year and 15-year was wider at 60 BPS.

The 10-year Treasury note, a gauge for long-term mortgage rates, yielded 4.46% with a price of 98.28 late Thursday, compared to 4.36% and 99.09 a week earlier.

Freddie said 5-year Treasury-indexed hybrid adjustable-rate mortgages jumped the highest of all mortgage rates during the week — up nine BPS to an average of 5.57%.

The 1-year Treasury-indexed ARM reportedly averaged 4.85%, up seven BPS from last week. The increase was slighter in the 1-year T-bill used to index many ARMs, which at 4.14% on Tuesday rose 5 BPS from a week earlier, the Federal Reserve reported.

Freddie Mac chief economist Frank Nothaft indicated that mortgage rates continued along the upward path they are expected to keep following due to a better-than-expected employment report in the aftermath of Katrina and Rita.

“This indicates that economic growth is likely to accelerate in 2006,” Nothaft said in the announcement. “That acceleration of growth, coupled with the specter of higher energy costs, will translate into higher long-term mortgage rates in the coming months. Mortgage rates are projected to rise gradually over the next year, with the 30-year (fixed rate mortgage) expected to hover around six percent through 2005, and reach 6.4 percent by 2006.”

In line with the economist’s outlook, half the panel of 100 mortgage industry “experts” surveyed by Bankrate.com this week expect rates to remain right about where they are over the next 35 to 45 days, while the rest were evenly split predicting a rise or a drop.

For the third consecutive week, mortgage application volume slipped mainly due to a 5% decline in refinance requests as purchase money application activity was almost unchanged from the prior week, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Oct. 7.

While the refinance share of mortgage activity reportedly edged down below 44%, the ARM share was unchanged at 30%.