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Stronger Mortgage Market30-year at 5.69%, apps rise

October 22, 2004


Falling mortgage rates have spurred mortgage activity and led at least one major mortgage player to lower its year-end predictions for rates.

Decreasing for the second week in a row to levels not seen since early April, the averages for the 30-year fixed-rate mortgage at 5.69% and the 15-year at 5.07% respectively dropped 5 and 7 basis points (BPS) within the past week, according to Freddie Mac’s latest Primary Mortgage Market SurveyLast year at this time, the averages for these mortgages were higher by about one-third of a percentage point.

“Treasury bond yields eased somewhat this week, causing long-term mortgage rates to drift a little lower from last week,” said Frank Nothaft, Freddie’s chief economist, in a written statement.

The 10-year Treasury note fell below 4% for the first since September when “oil futures prices briefly topped $55 a barrel after a report showed U.S. supplies of distillate fuel … shrank for a fifth straight week, heightening fears of a winter-fuels crunch,” according to the Associated Press.

At Wednesday’s close, the 10-year Treasury note traded at a 3.99% yield and price of 102. A week ago, the 10-year closed with a 4.08% yield.

Unlike, its long-term counterparts, the 1-year Treasury-indexed adjustable-rate mortgage (ARM) edged up to 4.02% this week, Freddie said.

In its updated economic outlook, Fannie Mae restated the market consensus; long-term interest rates should begin moving upward again. The mortgage giant added, however, that “the lower path of rates over the past month should mean that rates will end the year at a somewhat lower level than we had previously expected” — its prediction of 5.90% for the 30-year average this quarter is 34 BPS below its estimate a month ago.’s surveyed panel, which includes mortgage brokers and bankers, continues to believe mortgage rates will stay steady over the next month and a half; more than half, or 57%, predicted rates will stay about the same (plus or minus 2 basis points), less than a third said rates will rise, and the rest said rates would downturn.

Taking note of the lower rates, more prospective borrowers headed to mortgage shops — pushing the Market Composite Index up 8% from the previous week to 709.9, according to the latest survey by the Mortgage Bankers Association (MBA). A year ago, the trade group’s survey of mortgage bankers, commercial banks and thrifts, showed this index was lower at 652.8.

The stack of applications grew from the previous week due to an 11% jump in refinancing requests and 6% increase in purchase money application activity, MBA said.

The refinance share of total mortgage applications reportedly climbed 1% from the previous week to 46%.

Meanwhile, MBA said the ARM share of applications swerved from three consecutive weekly increases, but stayed close to 35%.


Coco Salazar is an assistant editor and staff writer for email: [email protected]

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