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Mortgage Market Weakens

Mortgage Market WeakensAverage 30-year 6.17%

December 27, 2007


Mortgage rates were mixed this past week, though loan applications were clearly lower.

The average 30-year fixed-rate mortgage was 6.17% in Freddie Mac’s latest Primary Mortgage Market Survey announced today. The 30-year rose 3 basis points from a week earlier but was 1 BPS lower than a year earlier.

The 15-year fixed-rate averaged 5.79%, unchanged from the prior week, Freddie said.

Stronger consumer spending and an increase in the November core price deflator was offset by a decline in the November index of leading economic indicators and a weak December manufacturing report in Philadelphia, Frank Nothaft, chief economist for Freddie, said in the statement.

While one-third of the mortgage bankers, mortgage brokers and others surveyed by this week forecast falling rates, 58% saw an uptick while the rest predicted no change.

A barometer of fixed mortgage rates, the 10-year Treasury yield, was 4.23% near midday, down 5 BPS for the day but well above 4.00% reported week earlier.

The average 5-year Treasury-indexed hybrid adjustable-rate mortgage was unchanged from the prior week at 5.90%, Freddie’s data indicated.

The 1-year Treasury ARM averaged 5.53%, up from 5.51% last week, Freddie reported. The yield on the 1-year Treasury itself was 3.49% yesterday, rising about 23 BPS over the prior seven days, according to data from the U.S. Treasury.

Another ARM index, the London Interbank Offered Rate — or LIBOR, yielded 4.72% as of Wednesday, falling from 4.83% seven days earlier, reported.

ARMs accounted for 10% of loan applications tracked in the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey. A week earlier, the ARM share was slightly lower.

MBA said 9% decline in refinance applications led to an 8% decline in overall applications. Refinances represented 53 percent of all applications, barely changed from the previous week.

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