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| Fixed mortgage rates shot up — with the 30-year increasing more than it has in two decades. But the one-year adjustable-rate mortgage barely moved, and applications for refinances, reported on a one-week lag, were stronger.
The 30-year fixed-rate mortgage averaged 6.46% in Freddie Mac’s rate survey for the week ending Oct. 16. The average 30-year shot up from 5.94% last week and was higher than 6.40% during the same week last year. Freddie said the weekly increase was the biggest since April 17, 1987, when the 30-year jumped 84 basis points. The increase in the 30-year reflected a similar rise in 10-year Treasury yield, which climbed to 4.04% yesterday from 3.72% a week earlier, according to Federal Reserve data. The average 15-year fixed-rate mortgage rose to 6.14% from last week’s 5.63%, Freddie said. More than half of the panelists surveyed by Bankrate.com for the week Oct. 16 to Oct. 22 expect rates to decline by at least 3 BPS during the next 35 to 45 days, while more than one-quarter predict an increase. The rest, 20%, see no changes ahead. Freddie reported a more moderate rise in the five-year Treasury-indexed hybrid ARM, which increased 24 BPS from last week to 6.14%. The one-year Treasury-indexed ARM edged up just 0.01% to 5.16%, according to Freddie’s survey. The latest activity pushed the spread between the 1-year ARM and the 30-year fixed-rate to 130 BPS this week from 79 BPS the week before — making the 1-year a more attractive option for prospective borrowers. Meanwhile, the 1-year Treasury yield itself was 1.14% yesterday, falling from 1.28% seven days earlier, according to data from the U.S. Department of the Treasury. Another ARM index, the 6-month London Interbank Offered Rate, climbed to 4.26% as of yesterday, Bankrate.com reported. A week earlier, LIBOR stood at 4.02%. ARM applications accounted for 3% of total 1003s tracked by the Mortgage Bankers Association in its Weekly Mortgage Applications Survey for the week ending Oct. 10. The previous week, ARMs represented 2% of activity. MBA reported that overall new applications rose 5% on a seasonally adjusted basis from the prior week, bringing its Market Composite Index to 489.3. The increase reflected last week’s decline in mortgage rates. Activity was driven by refinance applications, which rose 13 percent from the prior week and represented 46% of total applications compared to 43% the prior week. Purchase applications edged down fractionally and government activity was off 2%, MBA said. |
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Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com. e-mail:Â mtgsam@aol.com |
