Fixed mortgage rates — which are already at the lowest levels on record — are still falling, according to one market indicator. And while low interest rates have yet to attract more homebuyers to the market, an increase in traffic has been noted with existing borrowers who are seizing upon a rare refinance opportunity.
It was another record low for the average 30-year fixed-rate mortgage. Freddie Mac, a company that buys a big share of the country’s mortgages from banks, reported that the 30-year was 4.42 percent this week. Freddie said that it was the lowest level on record since the survey began in 1971.
An August forecast from Fannie Mae — which like Freddie purchases home mortgages from lenders then manages them for investors — has the 30-year mortgages averaging 4.5 percent during the current quarter and through the first-quarter 2011. The 30-year is expected to reach 5 percent no earlier than 2012.
The yield on the 10-year Treasury is used as a gauge for mortgage rates. The 10-year yield today was around 0.17 percent lower than last week, compared to a decline of just 0.02 percent with the 30-year — suggesting mortgage rates could come in around 0.15 percent better in next week’s reports.
But only 6 percent of the Bankrate.com panelists for the week Aug. 19 to Aug. 25 see mortgage rates falling by at least 0.03 percent over the next week. The rest were evenly split over whether rates would rise or stagnate.
Interest rates on jumbo mortgages — loans higher than $417,000 — this week were about 0.88 percent higher than on conforming loans, according to the Mortech-MortgageDaily.com Mortgage Market Index report this week. The jumbo spread improved from 0.91 percent last week.
Like the average 30-year, Freddie said the average 15-year fixed-rate mortgage was down 2 basis points from last week to 3.90 percent. The 15-year survey began in 1991, and this week was the lowest 15-year rate recorded.
Freddie reported no weekly change in the one-year Treasury-indexed ARM, which was 3.53 percent this week. But a year earlier, the one-year averaged 4.69 percent. Fannie forecasts the one-year to average 3.7 percent this quarter, 3.6 percent in the fourth quarter and stay within that range through the third quarter of next year.
New mortgage activity was up for the third consecutive week based on the Mortgage Market Index, which moved to 350 from 325 last week. The index reflects new loan activity at mortgage brokers this week.
A report from the Mortgage Bankers Association, which reflects last week’s application activity for mortgage bankers, showed applications rising 13 percent on a seasonally adjusted basis from the prior week.
Refinances represented 64 percent of the activity in this week’s Mortech-MortgageDaily.com report, higher than 62 percent a week ago.
