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Mortgage Rates, Treasury Yields Rise

Rates

Mortgage rates rose from record lows.

Climbing 6 basis points from last week’s record low, the average 30-year fixed-rate mortgage was 4.84% in Freddie Mac’s survey of 125 thrifts, commercial banks and mortgage lenders for the week ending May 7. The 30-year averaged 6.05 percent during the same week in 2008.

Freddie reported the average 15-year fixed-rate mortgage at 4.51% this week, climbing 3 BPS from the record low during previous week.

Frank Nothaft, Freddie’s chief economist, said the rise in rates was tied to positive economic news that suggested the bottom of the recession is in sight.

The yield on the 10-year Treasury note was 3.245% during trading today, higher than 3.121% seven days earlier.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 10 BPS more than last week at 4.90%, while the one-year Treasury-indexed ARM increased 0.01% to 4.78%.

The yield on the one-year Treasury bill was 0.51 percent yesterday, just 0.01% higher than a week prior, according to data from the U.S. Department of the Treasury.

The yield on the six-month London Interbank Offered Rate was 1.54% yesterday, Bankrate.com reported. LIBOR, which is the ARM index for many subprime loans, was 1.58% the previous week.

Just 2.1% of prospective borrowers who completed a mortgage application during the week ended May 1 chose to go with an ARM, the Mortgage Bankers Association said in its Weekly Mortgage Applications Survey. ARM share was unchanged from the prior week.

Reflecting last week’s improvement in mortgage rates, MBA said overall 1003s were up 2% on a seasonally adjusted basis, bringing the Market Composite Index to 919.7.

Purchase activity drove the increase, rising 5%, the trade group reported. Government applications were up 4%.

But refinance applications only increased 1 percent, leaving the refinance share 1% lower than last week at 75%, MBA said.

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