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Rates Likely to Hold

Rates

An increase in refinance activity was supported by a decline in mortgage rates — which are likely to hang at their current levels through next week.

Down 5 basis points from last week, the average 30-year fixed-rate mortgage was 4.98% in Freddie Mac’s Primary Mortgage Market Survey for the week ended today. The 30-year was 122 BPS better than during the same week last year.

Freddie said that the average 15-year fixed-rate mortgage fell 0.06% from last week to 4.40%.

The yield on the 10-year Treasury, which fixed mortgage rates tend to track, was 3.533% in early afternoon trading, about the same as 3.53% at the close of business last Thursday, according to U.S. Department of the Treasury data.

Half of the panelists surveyed by Bankrate.com for the week Nov. 5 to Nov. 11 saw no changes ahead for mortgage rates during the next 35 to 45 days. But 43% projected that rates will rise at least 3 BPS, while just 7% forecasted a decline.

The five-year Treasury-indexed hybrid adjustable-rate mortgage saw a bigger decline than fixed rates — averaging 7 BPS less than last week at 4.35% in Freddie’s latest survey.

But the biggest decline was with the one-year Treasury-indexed ARM, which averaged 4.47% — 10 BPS better than last week — according to Freddie’s report. The one-year was 78 BPS better than last year.

The underlying index, the yield on the one-year Treasury bill, closed yesterday at 0.36%, easing from 0.39% a week earlier, the Treasury reported.

The London Interbank Offered Rate was 0.56% as of yesterday, easing from last week’s 0.58%, Bankrate.com reported. LIBOR impacts many subprime ARM borrowers.

ARM applicants accounted for 6.1% of activity in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Oct. 30, lower than 6.9% the previous week.

MBA said overall applications were up 8% on a seasonally adjusted basis from a week earlier. The increase was supported by a 15% rise in refinance activity, pushing MBA’s refinance share to 66% from 62% a week prior.

Purchase applications, however, fell 2% in MBA’s survey.

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