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| Positive economic news pushed fixed rates up once again and dragged down demand for mortgages. The share of variable-rate loans declined as yields on the 1-year and 5-year headed in opposite directions.
The 30-year fixed-rate mortgage averaged 6.42%, rising 5 basis points from last week, Freddie Mac’s latest survey of mortgage lending thrifts, commercial banks and companies showed. Nonetheless, the average was still lower than 6.67% a year ago. The 15-year came in at 6.12%, or 6 BPS higher than a week ago, Freddie said. The 10-year Treasury note yielded 4.90% near midday, worse than 4.84% last Thursday afternoon. “Interest rates on fixed-rate mortgages increased further this week following stronger growth in orders for durable goods,” said Frank Nothaft, Freddie’s chief economist, in an announcement. “Recent reports have indicated that economic growth outside of the housing market remains robust, with a healthy consumer sector and improving business spending.” And rates will keep heading upward over the next month and a half or so, according to 58 of the 100 mortgage industry “experts” surveyed by Bankrate.com this week. Another 26 believed rates will remain relatively unchanged and only 16 forecast a downfall. Next quarter, the 30-year may average anywhere from 6.2% to 6.5%, according to the latest forecasts of Freddie, Fannie Mae and the Mortgage Bankers Association, with the first two groups predicting the lower figure. Yields on adjustable-mortgages diverged — with the 5-year Treasury-indexed hybrid jumping 17 BPS from last week to 6.19% and the 1-year Treasury-indexed ARM falling 7 BPS to 5.57% even as the 1-year Treasury bill itself, reported at 4.96% by the Federal Reserve on Tuesday, was unchanged from a week earlier. The ARM share of applications nudged down to below 18% during the week ending May 26, according to MBA’s latest Weekly Mortgage Application Survey. Overall application volume fell as well — by 7 percent from the previous week — due to refinance requests plunging 13 percent and purchase money demand decreasing 3 percent, MBA said. Conventional mortgage requests dropped 8 percent from a week earlier. The portion of refinance applications fell below 40% from 42% in the prior week. |
