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Mortgage Market Mostly Improves

Rates

Fixed rates tumbled, the jumbo spread improved and mortgage activity rose 8%. But the spread on adjustable-rate mortgages fell and fixed rates could turn higher.

Tumbling 14 basis points from a week earlier, the average 30-year fixed-rate mortgage was 5.07% in Freddie Mac’s Primary Mortgage Market Survey for the week ended today. The 30-year was 4.82% a year ago.

In the Mortech-MortgageDaily.com Mortgage Market Index report for the week ended April 14, the conventional 30-year fell to 5.142% from 5.243% the previous week. The 30-year jumbo declined to 5.850% from 5.980%, cutting the jumbo-conventional spread to 71 BPS from 74 BPS.

Down 12 BPS from seven days earlier, the average 15-year fixed-rate mortgage was 4.40% in Freddie’s survey. The conventional 15-year fell to 4.400% from 4.470% in the Mortgage Market Index report.

An indicator of where mortgage rates are headed, the10-year Treasury bond yield, closed today at 3.86%, lower than 3.91% last Thursday, according to U.S. Department of the Treasury data. The smaller decline on the 10-year yield suggests rates might be higher in next week’s reports.

An equal share of panelists, 39%, surveyed by Bankrate.com for the week April 15 to April 21 predicted rates will either increase at least 3 BPS over roughly the next week or remain at their current levels. The remaining 22% of panelists predicted rates will fall.

At 4.08%, the five-year Treasury-indexed hybrid ARM averaged 17 BPS less than in Freddie’s prior survey.

The one-year Treasury-indexed ARM averaged just 0.01% less than last week at 4.13%, according to Freddie’s survey. The one-year was 4.91% during the same week in 2009. The disparate decline in the one-year ARM and the 30-year reduced the spread to 94 BPS from 107 BPS last week.

The index on the one-year ARM, the yield on the one-year Treasury bill, closed today at 0.43%, lower than 0.46% seven days prior. Another ARM index, the six-month London Interbank Offered Rate, climbed to 0.46% yesterday from 0.45% on April 7, according to Bankrate.com.

Last week, when the spread between the one-year ARM and 30-year fixed-rate widened 4 BPS, the share of ARM applications increased to 6.3% from the prior week’s 6.2% in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended April 9. With this week’s narrowing of the spread, MBA’s next report is likely to reflect a lower ARM share.

Mortgage activity increased 8% from last week based on the Mortgage Market Index, which came in at 245.

MBA’s survey, which reflects last week’s activity, said applications were down 10% on a seasonally adjusted basis. Refinance applications were 9% lower and purchase applications were down 11%.

MBA Vice President of Research and Economics Mike Fratantoni highlighted in the report that the decline followed the implementation of higher FHA mortgage insurance premiums.

Refinance share rose to 34 percent in the Mortgage Market Index report from one-third the prior week. Cashout-share was 12%, while rate-term refinances represented 21%. MBA’s data indicated last week’s refinance share was mostly unchanged from a week earlier at 59%.

The average U.S. loan amount rose to $205,074 in the Mortech-MortgageDaily.com report from $203,241 a week earlier.

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