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Activity Higher, Rates Fall But Heading Higher

Rates

Fixed mortgage rates fell this past week but are likely headed higher. The falling rates boosted mortgage activity this week. The spread on jumbo mortgages, meanwhile, improved.

The average 30-year fixed-rate mortgage fell 4 basis points from the prior week to 4.97% in Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 11. The 30-year was 19 BPS better that 52 weeks prior.

In the Mortech-MortgageDaily.com Mortgage Market Index report for the week ended yesterday, the conventional 30-year was unchanged for the fourth consecutive week at 4.875%. The report was based on 139,529 Mortech Inc. user inquiries during the week. But the 30-year jumbo declined to 5.75% from 6.00%, reducing the jumbo spread to 88 BPS from the previous week’s 113 BPS.

The average 15-year fixed-rate mortgage also fell in Freddie’s survey from last week — down 6 BPS to 4.34%. The conventional 15-year was unchanged at 4.250% in the Mortech-MortgageDaily.com report.

The yield on the 10-year Treasury bond, an indicator of mortgage rate movements, jumped to 3.740% near mid-day, according to WSJ.com. The 10-year yield closed at 3.62% last Thursday based on U.S. Department of the Treasury data. The roughly 12 basis-point rise suggests mortgage rates might do the same by next week’s report.

But mortgage rates are likely to remain unchanged based on responses from more than half of the 100 panelists surveyed by BankRate.com for the week Feb. 11 to Feb. 17. However, rates will rise at least 3 BPS according to 40 panelists, while seven predicted a decline.

Down 8 BPS from seven days earlier, Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.19%.

The one-year Treasury-indexed ARM rose, however, to 4.33% from the prior week’s 4.22%. But the one-year was lower than 4.94% the prior year. The underlying index, the yield on the one-year Treasury bill, closed yesterday at 0.38%, up from 0.35% a week earlier, according to Treasury Department data.

The London Interbank Offered Rate rose to 0.39% yesterday from 0.38% one week prior, Bankrate.com reported.

ARMs represented 4.5% of applications tracked in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Feb. 5, the same as the week before.

The Mortgage Market Index increased around 8% this week, with inquiries-per-user jumping to 35 from around 32 last week. The average U.S. loan amount climbed to $210,624 from $207,116 last week. Washington, D.C.’s, average $309,953 loan amount was highest, followed by Hawaii’s $290,740 and Alaska’s $275,756.

In MBA’s survey, which reflects data that is one week older, applications declined 1% on a seasonally adjusted basis. Purchase activity supported the decline, falling 7%, while refinances were off by 1%.

The share of activity that was for refinances edged up to 48% in the Mortech-MortgageDaily.com report. The rate-term share was 33%, while the cashout share was 15%. MBA’s older data indicated that total refinance share edged up to 70% from 69%.

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