Mortgage lending activity fell this past week, while mortgage rates eased and the jumbo spread improved.
The Primary Mortgage Market Survey for the week ended April 22 from Freddie Mac indicated that the average 30-year fixed-rate mortgage was unchanged from the prior week at 5.07%. But the 30-year was higher than 4.80% a year earlier.
The conventional 30-year rate was 5.113% in the Mortech-MortgageDaily.com Mortgage Market Index for the week ended April 21, lower than 5.142% seven days earlier. Jumbo rates, meanwhile, fell to 5.790% from 5.850% — cutting the conforming-jumbo spread to 68 BPS from 71 BPS.
In its April housing forecast, Fannie Mae predicted that the 30-year will average 5.17% in the current quarter, higher than the first quarter’s 5.00%.
The yield on the 10-year Treasury bond was 3.763% today, down from 3.86% at the close of trading last Thursday, according to data reported by the U.S. Department of the Treasury and WSJ.com. The 10-year movement suggests rates might ease in next week’s reports.
Mortgage rates are likely to rise at least 3 BPS over the next week or so based on nearly half of the panelists surveyed by Bankrate.com for the week April 22 to April 28. But 41% predicted no change, and 12% forecasted an increase.
The average 15-year fixed-rate came in at 4.39%, 1 basis point lower that Freddie’s prior survey. The 15-year eased to 4.350% from 4.400% in the Mortgage Market Index report.
The five-year Treasury-indexed hybrid adjustable-rate mortgage fell 5 BPS in Freddie’s survey to 4.03%.
The one-year Treasury-indexed ARM, however, climbed 9 BPS from the previous week to 4.22%, Freddie reported. A year ago, the one-year was 4.82%. Fannie forecasted that the one-year will average 4.36% this quarter, up from 4.25% in the first quarter.
Borrowers with one-year ARMs saw their underlying index, the yield on the one-year Treasury bill, ease to 0.44% as of yesterday from 0.45% one week earlier.
Subprime borrowers with ARMs tied to the six-month London Interbank Offered Rate saw LIBOR inch up 1 basis point to 0.47%, according to Bankrate.com.
ARMs accounted for 6.0% of activity in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended April 16, down from 6.3% the previous week. The decline was impacted by a bigger drop in last week’s 30-year — 14 BPS — than the 1 basis point decline in the one-year.
Second-quarter ARM share will rise to 7% from 5% in the first quarter, according to Fannie’s forecast.
The Mortgage Market Index declined 9 percent from last week. The drop was likely influenced by this month’s expiration of the homebuyer tax credit.
The previous week, applications rose 14% on a seasonally adjusted basis from seven days earlier based on MBA’s survey. Refinances were up 16%, while purchase activity was 10% higher.
The average U.S. loan amount eased to $204,431 from the previous week’s $205,074 in the Mortgage Market Index report. Washington, D.C.’s, $301,116 average loan amount was the highest of any state, while West Virginia’s $136,762 was the lowest.
Refinance share was one-third in the Mortech-MortgageDaily.com report, barely lower than 34 percent last week. This week’s share reflected a 21% rate-term share and a 12% cashout share.
MBA’s older data indicated refinance share increased to 60% last week from 59%.
Based on loan originations, Fannie projected that refinance share will tumble to 41 percent in the second quarter from just under two-thirds in the prior period. Refinance share is expected to bottom out at 31% in the third-quarter 2011.