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Rates, Business Improve

Rates

Mortgage Daily

                                                 January 6, 2011

Mortgage rates fell this week but might be higher in the next set of weekly reports. For the time being, refinance applications propped up overall business.

At 4.77 percent, the average 30-year fixed-rate mortgage was down 9 basis points from the previous week in Freddie Mac’s weekly survey of 125 mortgage lenders. The 30-year was 5.09 percent during the same week last year.

The spread between the jumbo 30-year fixed-rate mortgage and the conforming 30-year improved to 86 BPS in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday from 87 BPS a week earlier.

The yield on the benchmark 10-year Treasury jumped to 3.44 percent today, according to data published by the Treasury Department. Last Thursday, the 10-year was 3.38 percent. The activity suggests that the 30-year might be around 4.90 percent in Freddie’s next report.

Exactly half of the panelists surveyed by Bankrate.com for the week Jan. 6 to Jan. 12 predicted that mortgage rates will increase at least 3 BPS over the next week. Less than a third saw no changes ahead, and 19 percent projected a decline.

“Barring a new economic crisis of widespread proportions, it’s increasingly unlikely that we will challenge the 56-plus-year lows for mortgage rates seen in 2010,” HSH said in its Eight Most Important Factors for 2011’s Mortgage Market. “Borrowers will again have to become accustomed to rates in the low- and mid-five-percent range for 30-year fixed rates.”

Freddie reported the average 15-year fixed-rate mortgage at 4.13 percent, 7 BPS better than the prior week.

With a 2-basis-point weekly decline, the five-year Treasury-indexed adjustable-rate mortgage averaged 3.75 percent.

The one-year Treasury-indexed ARM was off 2 BPS to 3.24 percent. In the same week during 2010, the one-year was 4.31 percent.

The yield on the one-year Treasury edged up to 0.30 percent today from 0.29 percent seven days prior based on Treasury Department data. The six-month LIBOR was unchanged from last week at 0.46 percent, according to Bankrate.com.

The Mortgage Market Index climbed to 184 for the week ended Wednesday from 140 during the holiday week seven days earlier. The index stood at 182 a year earlier. Driving this week’s improvement were refinances, which accounted for 51 percent of activity in the report versus 46 percent last week. This week’s rate-term share was 36 percent, and the cashout share was 15 percent.

The Mortgage Bankers Association reported that in the week ended Dec. 31, application volume rose 2 percent on a seasonally adjusted basis from the prior week.

The average U.S. loan amount in the Mortech-Mortgage Daily report rose to $203,918 from the prior week’s $197,992. Hawaii’s $310,987 average was highest this week, and South Dakota’s $141,447 was lowest.

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