Mortgage Activity Falls as 10-Year Yield Down

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MORTGAGE EXPERT
2 · 04 · 10

Mortgage experts predict rates will rise, but a big decline in the stock market today is placing downward pressure on mortgage rates. Meanwhile, loan activity fell this week.

Up 0.03% from last week, the average 30-year fixed rate mortgage was 5.01% in Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 4. The 30-year was 24 basis points higher a year ago.

The conventional 30-year rate was unchanged at 4.875% in the Mortech-MortgageDaily.com Mortgage Market Index for the week ended Feb. 3, which was based on 128,924 Mortech Inc. inquiries. The 30-year jumbo was also unchanged, at 6.000%.

In the Mortgage Bankers Association’s survey of mortgage bankers, commercial banks and thrifts for the week ended Jan. 29, the trade group’s vice president of research and economics, Michael Fratantoni, predicted mortgage “rates will rise over the next few months as the Federal Reserve winds down its MBS purchase program.”

An equal number of panelists — 43 — predicted rates would either rise or stay within 2 BPS of their current levels in the Bankrate.com survey for the week Feb. 4 to Feb. 10. Just 14 forecasted a decline.

But the yield on the 10-year Treasury bond points to a near-term decline in fixed-mortgage rates. The 10-year yield was 3.614% this afternoon, sliding from 3.68% last Thursday as the Dow Jones Industrial Average tumbled more than 200 points today, according to data reported by the U.S. Department of the Treasury and WSJ.com.

Just 0.01% higher than seven days earlier, Freddie said the average 15-year fixed-rate mortgage was 4.40%. The Mortech-MortgageDaily.com data indicated that the conventional 15-year rate was unchanged 4.250%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.27%, 2 BPS more than last week in Freddie’s survey.

But the one-year Treasury-indexed ARM averaged 7 BPS less than last week at 4.22%, Freddie said. The one-year was 70 BPS better than last year. The yield on the one-year Treasury Bill itself closed yesterday at 0.35%, edging up from 0.33% a week earlier.

The six-month London Interbank Offered Rate was 0.38% yesterday, Bankrate.com reported, the same as the prior week.

MBA said ARM’s accounted for 4.5% of applications, lower than 4.7% the previous week.

Weekly mortgage activity declined 10% in the Mortech-MortgageDaily.com index. The average U.S. loan amount was $207,116, lower than $207,792 the prior week. Hawaii’s average $311,557 loan amount was highest, followed by $299,458 in Alaska and $284,764 in Washington, D.C. The lowest loan amount was in West Virginia: $132,993.

MBA’s report, which is based on data from a week ago, indicated applications increased 21% from the prior week on a seasonally adjusted basis.

Refinances represented 48% of activity in the Mortech-MortgageDaily.com report, lower than half during the previous week. Rate-term transactions made up nearly one-third of total volume, and cashouts accounted for 15% of the latest activity.

Refinance volume was up by more than a quarter in MBA’s survey, while the refinance share climbed to 69% from 68%. Purchase activity was 10% higher.

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Mortgage Daily Staff

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