Maybe it was just too good to last.
After four weeks of declining interest rates Freddie Mac reported
a relatively sharp jump for each of the products it tracks during the week ended
Frank Nothaft, Freddie Mac's vice president and chief economist blamed
inflation jitters for the spike, saying "Renewed concern
that inflation is still an issue put some upward pressure on bond yields, which
generally translates into higher interest and mortgage rates. ARM rates especially
felt the weight of increased inflation fears, narrowing the gap between ARMs
and fixed-rate mortgage rates. Thus, ARMs may become less desirable."
The details of the Primary Mortgage Market Survey are as follows:
The 30-year fixed-rate mortgage had an average contract interest rate of 6.37
percent with 0.5 points compared to 6.30 percent with 0.3 for the week ended
October 5. One year ago the 30-year averaged 6.03 percent.
The 15-year fixed-rate mortgage increased 8 basis points to 6.06 percent and
fees increased from 0.4 to 0.5. This is 44 basis points higher than the 15-year
was the same week in 2005.
The Treasury-indexed 5/1 hybrid mortgage averaged 6.10 with 0.6 point. The
previous week it was at 6.0 percent with 0.5 point and in mid October 2005 it
averaged 5.57 percent.
One-year Treasury-indexed ARMs averaged 5.56 percent with
0.7 point, a jump of 10 basis points over the average the previous week. Points
were unchanged. At this time last year the one-year ARM averaged 4.85 percent.
Rates were also up according to the Mortgage Bankers Association's Weekly
Mortgage Applications Survey for the week ending October 13. The average contract
interest rate for 30-year fixed-rate mortgages was 6.33 percent compared to
6.27 percent the previous week. Points, including the origination fee, increased
from 1.08 to 1.15.
15-year fixed rate mortgages carried an average rate of 6.01 percent, up 2
basis points from one week earlier. Points, however, dropped from 1.11 to 1.08.
increased from 5.88 percent to 5.94 percent with points inching up from 0.85
All rates quoted are for 80 percent loan to value mortgage originations.
Mortgage application volume was down slightly from the week
of October 6. 2.2 percent fewer applications were received on a seasonally adjusted
bases and 2.3 percent on an unadjusted basis from that earlier week. The pace
of applications was off 11.4 percent from the same week in 2005.
Refinancing as a share of all activity dropped from 46.4 percent to 45 percent
between October 6 and October 13 and the share of adjustable rate mortgages
continued to drop - down to 26.5 percent from 26.9 percent one week earlier.