Mortgage Market Deteriorates


Mortgage Daily Staff

                                                 December 24, 2009

Mortgage rates rose, while applications and average loan amounts declined.

Up 11 basis points from the prior week, the average 30-year fixed-rate mortgage was 5.05% in Freddie Mac’s survey of 125 thrifts, credit unions, commercial banks and mortgage lenders for the week ended Dec. 24. The 30-year was 9 BPS better than the same week last year.

The yield on the 10-year Treasury bond closed at 3.82%, according to U.S. Department of the Treasury data. Last Thursday, the 10-year yield closed at 3.50%. The movement in the 10-year suggests mortgage rates might climb higher by next week’s survey.

But the majority of the panelists surveyed by for the week Dec. 24 to Dec. 30 disagreed, predicting that rates will fall at least 3 BPS during the next 35 to 45 days. Just under half forecasted an increase — and none projected no change.

Freddie’s regulator — the Federal Housing Finance Agency — reported that the average 30-year fixed-rate mortgage eased 1 basis point in November to 5.09%.

In the Mortgage Market Index for the week ended Dec. 23, the conventional 30-year averaged 4.875%, unchanged from a week previous.

The latest report reflects data from more than 100,000 pricing engine inquiries by Mortech’s more than 10,000 users.

Freddie reported the average 15-year fixed-rate at 4.45%, 7 BPS worse than a week prior. In the report, the 15-year averaged 4.250%. The FHFA said the 15-year inched up 1 basis point in November to 4.63%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage edged up 3 BPS to 4.40%, according to Freddie.

The one-year Treasury-indexed ARM was up 4 BPS to 4.38%. A year prior, the one-year stood at 4.95%. The yield on the underlying one-year Treasury bill closed today at 0.43%, up from 0.35% seven days earlier, the Treasury reported.

The six-month London Interbank Offered Rate, which is the index on a big share of subprime ARMs, was 0.43% yesterday, according to LIBOR was down from 0.45% last week.

ARMs accounted for 3.8% of loan applications tracked in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Dec. 18, lower than 4.1% the prior week.

MBA reported that overall loan applications fell 11% from the prior week on a seasonally adjusted basis. A 12% drop in purchase activity contributed to the weekly decline, as did a 10% decline in refinance applications. Refinance share edged up to 76% from 75% in MBA’s previous survey.

More recently, the refinance share fell to 50% in the Index. The prior week, refinance share was 52%. The most recent week included a cashout share of 15%.

The average U.S. mortgage amount was $209,354 in the index, rising from just over $207,385 last week. The highest average loan amount was $290,603 in Washington, D.C., followed by $273,977 in Hawaii and $271,210 in Massachusetts. On the low end, Nebraska’s average loan amount was $143,587.

The average jumbo loan amount in the index was $654,668, tumbling from $999,521 last week. Indiana’s $1,062,125 was the highest average jumbo amount of any state.

The most popular program in the latest index was the conventional 30-year mortgage, which saw 4,334 inquiries from Massachusetts originators. Missouri’s conventional 30-year followed with 2,937 inquiries, then 2,342 conventional 30-year inquiries in California.

Mortgage Daily Staff

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