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Rates Off Although ARM Indices Up


Borrowers with adjustable-rate mortgages were dealt a blow this week as indices for two ARM products jumped. But prospective borrowers were happy as mortgage rates improved this week — though next week might be another story.

The benchmark 30-year fixed-rate mortgage was 4.93% in Freddie Mac’s latest weekly survey of 125 mortgage lenders. The 30-year was lower than 5.00% last week and the lowest it has been all year. But the 30-year was higher than 4.86% a year ago.

The conventional 30-year was 4.980% in the Mortgage Market Index for the week ended May 12, improving from 5.065% a week ago. The jumbo 30-year fell 5.760% from 5.780% — pushing the convention-jumbo spread to 78 BPS from 72 BPS last week.

Frank Nothaft, Freddie’s chief economist, noted that mortgage rates have fallen for five consecutive weeks.

But rates are going to rise based on the 10-year Treasury yield — which closed Thursday at 3.55%, the U.S. Department of the Treasury reported. Last Thursday, the 10-year yielded 3.41%.

However, don’t expect mortgage rates to change based on 64% of the panelists surveyed by for the week May 13 to May 19 — though 29% expect rates to increase at least 3 BPS over the roughly next 10 days, and the rest foresee no change.

Freddie reported that the average 15-year fixed-rate mortgage was down 6 basis points from last week to 4.30%.

At 2 BPS better than last week, the five-year Treasury-indexed hybrid ARM averaged 3.95% in Freddie’s report.

The one-year Treasury-indexed ARM was 5 BPS better than last week, coming in at 4.02% in Freddie’s survey. The one-year was 4.71% 12 months prior. The underlying one-year Treasury bill yield rose to 0.40% at the close of the market on Thursday from 0.34% the week before, data from the Treasury inidcated.

The London Interbank Offered Rate, or LIBOR, rose to 0.62% Wednesday from 0.55% the prior Wednesday, according to data from

ARMs represented 6.3% of activity in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended May 7, the same as the previous week.

Mortgage activity eased this past week, with the Mortgage Market Index down to 239 from 242 last week. The average U.S. loan amount was $214,339, higher than $206,815 seven days earlier. North Dakota’s $334,427 average loan amount was the highest of any state this week, while Mississippi’s $149,256 was the lowest.

A week earlier, based on the MBA report, loan applications were up 4% on a seasonally adjusted basis from the prior week. Purchase activity was down 10% but refinance applications were up 15% and accounted for 58% of the latest activity, higher than 52%.

The report indicated that the total refinance share was 39%, jumping from 32% last week. Reflected in this week’s total was a 27% rate-term refinance share and a 13% cashout refinance share.

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