|More people than ever are seeking financing for a home purchase as rates barely budged. But until further data can signal how fast or slow the economy is growing, an industry forecast has a lowered outlook for the 30-year yield.
The average 30-year fixed-rate mortgage was 5.77%, edging up two basis points from last week, according to Freddie Mac’s Primary Mortgage Market Survey released today.
Freddie’s May outlook has the 30-year averaging 5.9% this quarter and rising to 6.1% at the end of the year, much lower than the respective period figures of 6.2% and 6.4% forecasted a month earlier.
“The bond market isn’t exactly sure how fast or slow the economy will expand in the long term and thus bond yields have remained (remarkably) low,” commented Freddie chief economist Frank Nothaft in a written statement. “Hence, we expect mortgage rates to remain relatively low for the time being.“
The 10-year Treasury Bond yield was 4.21% Thursday afternoon, up from 4.17% reported a week ago, while the price was 98.28, down from 98.63 last week.
At Bankrate.com, the panel of 100 industry bankers, brokers and individuals surveyed this week was evenly split between those (43%) who thought rates were more likely to remain about the same within the next 35 to 45 days and those (43%) who predicted a rise, while the rest (14%) believed they were more likely to fall.
The average for the 15-year also went up two BPS within the past seven days to 5.33 percent, Freddie said.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly climbed by the most — up five BPS from last week to 5.21%.
The 1-year Treasury-indexed ARM came in at 4.23 percent, Freddie reported, just one BPS above its average a week ago.
Mortgage shops had been quiet despite falling rates, but that was not the case last week. Application activity jumped 9% — as shown in the Market Composite Index of 781.0, the Mortgage Bankers Association reported. The index is also higher than the measure of 742.2 a year ago when the 30-year was 57 BPS higher than its current level.
Refinance loan requests jumped 10% from the previous week whereas purchase money loan requests boosted the Purchase Index by 9% to a milestone 526.2, MBA said.
“Strong support for home sales has been provided by a recent decline in interest rates, a strong jobs market, and nice weather during the spring-buying season,” said MBA chief economist Douglas Duncan in an announcement. “These factors have led to a record level of purchase applications on both weekly and four-week rolling averages.”
Despite the boost in refinance requests, the refi share of applications was almost unchanged at 39%. The ARM share, however, increased to 35% from one-third the previous week, MBA said.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]