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Rates, Apps Deteriorate

Rates, Apps DeteriorateAverage 30-year fixed-rate 5.12%

January 22, 2009

By MortgageDaily.com staff

An 11-week decline in fixed rates has come to an abrupt end. As mortgage rates head higher, new 1003 loan applications headed lower.Fixed-rate 30-year mortgages averaged 5.12% in Freddie Mac’s Primary Mortgage Market Survey for the week ending Jan. 22. The 30-year rose from 4.96% a week earlier — the first increase since Oct. 30. A year earlier, the 30-year was 5.48%.

The average 15-year fixed-rate mortgage jumped 15 basis points from the previous week to 4.80%, Freddie reported.

The yield on the 10-year Treasury — which historically has been tracked by fixed mortgage rates — was 2.628% near midday, climbing from around 2.222% seven days earlier.

Panelists surveyed by Bankrate.com for the week Jan. 22 to Jan. 28 offered little direction about where mortgage rates are headed, with just over a third projecting no change. Panelists who predicted rates will either rise or fall at least 3 BPS during the next 35 to 45 days each accounted for just under a third of the surveyed group.

Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.24%, declining 0.01% from last week.

The one-year Treasury-indexed ARM averaged 4.92%, 3 BPS higher than the prior week, Freddie reported. The underlying index — the one-year Treasury yield itself — was 0.43% yesterday, 0.01% higher than a week prior, according to data reported by the U.S. Department of the Treasury.

Another ARM index, the six-month London Interbank Offered Rate, was 1.55% yesterday, Bankrate.com reported. Last week, LIBOR was 1.47%.

ARMs represented 2% of overall applications taken by loan originators in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Jan. 16, up from 1% the prior week.

On a seasonally adjusted basis, overall loan applications tracked in MBA’s survey fell 10% from the previous week, bringing the trade group’s Market Composite Index to 1195.3.

A 12% decline in refinance applications drove the decline in overall applications. Refinances accounted for 83% of total activity in the latest MBA survey.

Purchase activity was up 3%, while government loan applications — which mainly reflect applications for loans insured by the Federal Housing Administration — were up 2%.

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