Although one industry expert remains confident rates won’t rise dramatically, the upward trend has visibly slashed applications.
The Mortgage Bankers Association of America (MBA) reported a 20.5% slump in overall applications for the week ending October 10, lowering the Market Composite Index to 649.6. A year ago this index stood at 1288.4.
While the prior week’s refinance applications had increased nearly 20%, the recent Refinance Index reversed the gain completely decreasing 22.1% from the prior week to 2340.1, according to the MBAs Weekly Mortgage Applications Survey. Last year at this time, the index was reported at 6793.8, marking the twelfth consecutive week it’d been above 4000. The refinance share of mortgage activity slightly decreased to 53.9 percent.
As for rates, Freddie Mac reported in its Primary Mortgage Market Survey that the 30-year fixed-rate mortgage averaged 6.05%, a 10 basis points (BPS) higher than the prior week. The prior year, the 30-year averaged 6.15%.
The average 15-year loan also increased 10 BPS from last week to 5.36%, according to Freddie’s survey.
Freddie reported the 1-year Treasury-indexed adjustable-rate mortgages (ARMs) increased 10 BPS to 3.79%, while MBA said the application ARM share of activity edged up to 25.2 percent.
“Bond yields have been creeping up on an almost daily basis since the beginning of October, pushing mortgage rates up as they go,” said Frank Nothaft, Freddie’s chief economist, in an announcement. “Inflation remains low, however, and we expect that to continue into 2004 and beyond. And as long as it does, we won’t see mortgage rates rising very dramatically.”
The 10-year Treasury note closed Thursday 17 BPS higher than reported last week at 4.46%. The price lowered from 99 21/32 last week to 98 10/32.
At Bankrate.com, 50% of the mortgage industry panelists believe mortgage rates will rise over the next 30 to 45 days. But, 30% say there’s little change in store for rates and 20% predict a downturn, according to the website.