|Traffic slowed at mortgage shops as long- and short-term rates drifted apart heading into the holidays.
Down four basis points from a week ago, the 30-year fixed-rate mortgage came in at 6.26%, according to Freddie Mac’s latest survey of 125 mortgage-lending companies, thrifts and commercial banks.
“Long-term mortgage rates dipped this week because of recently released inflation indicators for November,” Freddie chief economist Frank Nothaft said in a statement.
Half the panel of 100 mortgage bankers, brokers and individuals surveyed by Bankrate.com this week believe rates will take a breather (plus or minus 2 BPS) over the next 35 to 45 days. The other half is evenly split among those who expect rates to fall and those who think they’ll rise.
Fannie Mae’s latest forecast has the 30-year average at 6.32% next quarter and at 6.3% the remainder of 2006. Meanwhile, Freddie estimates 6.40% in the first quarter and ending the year at 6.6%, and the Mortgage Bankers Association respectively predicts 6.30% and 6.70%.
The average for the 15-year this week slid 6 BPS to 5.79%, Freddie said.
Last year at this time, the spread between the 30-year and 15-year was reportedly 10 BPS wider than the current 47 BPS spread.
The 10-year Treasury note yielded 4.43% late Thursday with a price of 100.53, compared to 4.46% and 100.25 a week ago.
Climbing five BPS from a week earlier, Freddie said the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.82%.
The average for the 1-year Treasury-indexed ARM reportedly made a larger hike — seven BPS to 5.22% this week. The Federal Reserve said the 1-year T-bill only went up 2 BPS during the week to 4.39%.
ARMs comprise about 33% of mortgage applications, MBA reported in its applications survey for the week ending December 16.
Freddie’s Nothaft attributed the rise in short-term rates to “the Fed’s recent — and expected future — actions.”
He added, “Although mortgage rates by and large are higher than they were at the start of this year, they’ve only risen about one percentage point since hitting a four-decade record low in June of 2003.”
Around mid-June that year, mortgage application volume had a Market Composite Index of 1701.7, much higher than the current 594.6, the MBA reported. The latest 1003 volume reflects a 4% decline for the week ending Dec. 16, with a 5% decrease in purchase money application activity 2% decline in refinance requests.
The refinance share of total applications, however, edged up from the prior week to 42%, MBA said.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. e-mail: [email protected]