Mortgage Market Gains Strength

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Mortgage rates saw a slight improvement this week, while the improvement was more pronounced for new loan activity. The spread between jumbo mortgages and conventional loans, meanwhile, widened.

Barely changed from last week when it came in at 4.99%, the average 30-year fixed-rate mortgage was 4.98% in Freddie Mac’s survey of 125 thrifts, credit unions, commercial banks and mortgage lenders for the week ended today. The 30-year was lower than a year earlier when it stood at 5.10%. For all of December, the average 30-year was 5.05%, down from 5.09% in November, Freddie’s regulator — the Federal Housing Finance Agency — reported.

The conventional 30-year rate was unchanged from the prior week at 4.875% in the Mortgage Market Index for the week ended Jan. 27. The index reflected 143,532 inquiries. The 30-year jumbo rate rose, however, to 6.000% from 5.750% last week — pushing the jumbo spread to 1.125% from 0.875%.

The yield on the 10-year Treasury bond, a key indicator for mortgage rates, increased to 3.652% during trading today from at 3.62% at the close of trading last Thursday, according to data from the U.S. Department of the Treasury and The 10-year activity suggests mortgage rates might inch in up in next week’s reports.

Half of the 100 panelists surveyed by for the week Jan. 28 to Feb. 6 predicted rates will rise at least 3 BPS during the next 35 to 45 days, while 29% foresaw no changes ahead and 21% projected a decline.

The average 15-year fixed-rate mortgage was down 1 basis point from last week to 4.39% in Freddie’s latest report. The average 15-year fell 9 BPS in December to 4.54%, according to the FHFA. The conventional 15-year was unchanged from the prior week at 4.25% in the report.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.25% in Freddie’s survey, down from 4.27% seven days earlier.

The one-year Treasury-indexed ARM was down 3 BPS to 4.29%, Freddie’s said. The one-year averaged 4.90% last year at this time. The yield on the one-year Treasury bill — which is used as the index on the one-year ARM — closed yesterday at 0.33%, higher than 0.31% the previous Wednesday, the Treasury reported. Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.38% yesterday, a basis point lower then last week, reported.

ARM share increased to 4.7% in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Jan. 22 from 4.1% a week prior.

The report indicated that new loan activity jumped 18% during the most recent week. The average U.S. loan amount edged lower to $207,792 from $207,927. The highest average was Hawaii’s $318,252, while the lowest average was in North Dakota: $129,839.

Last week, overall applications fell 11% on a seasonally adjusted basis in MBA’s most recent survey. Purchases were down 3%, but refinances fueled the overall decline — tumbling 15%.

Refinance share inched up to half from 48% in the index. The latest week reflected a 34% rate-term share and a 16% cashout share.

In MBA’s latest report, last week’s refinance share fell to 68% from the prior week’s 72%.


Mortgage Daily Staff


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