The 30-year fixed rate fell below 5 percent and is likely to fall further after comments by the president about limiting bank activities sent the stock market reeling.
The conventional 30-year fixed rate was 4.875% in the Mortech-MortgageDaily.com Mortgage Market Index for the week ended Jan. 20, unchanged from a week earlier. The 30-year jumbo rate was 5.75%, falling from 6.00% a week before.
Fannie Mae predicts that the 30-year will average 5.26% this quarter, then gradually climb to 5.82% by the end of the year.
The average 15-year fixed-rate mortgage was off 5 basis points from the prior week to 4.40%, Freddie reported.
Following President Barack Obama’s call today for Congress to restrict the size and scope of U.S. financial institutions — the Dow Jones Industrial Average tumbled more than 200 points and the 10-year yield sank from 3.76% a week ago to 3.601% during trading today, according to data from the U.S. Department of the Treasury and WSJ.com. The more than 15-basis-point decline suggests rates might have a little further to fall before next week’s report.
Fixed rates are likely to remain within 2 BPS of their current levels during the next 35 to 45 days based on predictions from 60% of the panelists surveyed by Bankrate.com for the week Jan. 21 to Jan. 27. More than a quarter forecasted an increase and 13% expected a decline.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5 BPS less than last week at 4.27% in Freddie’s survey.
Down more than any other mortgage product — the one-year Treasury-indexed ARM averaged 7 BPS less than last week at 4.32%, Freddie said. The one-year was 4.92% 12 months earlier. In its forecast, Fannie projected that the one-year will average 4.58% in the first quarter then rise to 5.16% by the end of the year.
The underlying index, the yield on the one-year Treasury bill, fell to 0.31% yesterday from 0.37% seven days earlier, based on Treasury data. The yield on the six-month London Interbank Offered Rate was 0.39% as of yesterday, Bankrate.com reported, 1 basis point higher than a week ago.
ARMs represented 4.1% of applications tracked in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Jan. 15, edging up from 4.0% in the previous survey.
Freddie’s 25th annual ARM survey released Tuesday found that borrowers preferred hybrid ARMs over annually adjusting ARMs.
The average U.S. loan amount edged up to $207,927 from $207,109 the prior week in the Mortech-MortgageDaily.com index. Washington, D.C., maintained its grip on the highest loan amount, coming in at $324,894, followed by $266,706 in Massachusetts and $263,784 in Delaware. North Dakota’s $136,751 was the lowest of any state.
The average U.S. jumbo loan amount declined to $659,348 from $676,182 in the prior Mortgage Market Index report.
Mortgage activity declined, with the number of pricing inquiries at Mortech inquiries falling 9% from the prior week in the Mortgage Market Index report.
But a week earlier, applications increased 9% on a seasonally adjusted basis in MBA’s survey. The rise was supported by a 10% increase in purchase activity and an 11% jump in refinances — which accounted for 72% of overall activity, unchanged from the previous week.
More recently, the share of inquiries in the Mortech-MortgageDaily.com report that were for refinances edged up to 48% from the previous week’s 47%. Rate-term refinances represented 32% in the latest week, while cashouts accounted for 16%.
Refinances are forecasted by Fannie to account for 60% of first-quarter originations, then linger between 35% and 38% through the end of 2009.