It was one of those weeks when one had to wonder if Freddie Mac and the Mortgage
Bankers Association were operating in the same universe. The former presented
results of its weekly survey indicating that mortgage rates
were dead in the water while the latter reported substantial interest rate declines
for all products.
Freddie Mac's Primary Mortgage Market Survey for the week ending October
18 show that the 30-year fixed-rate mortgage (FRM) was unchanged at 6.40 percent
although fees and points did increase from 0.4 to 0.5.
The 15 year FRM had an average contract interest rate of 6.08 with 0.6 point
compared to 6.06 percent with 0.5 points a week earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged
6.11 percent, two basis points lower than one week earlier. Fees and points
averaged 0.5 both weeks.
All three of these average rates were within two or three basis points of the
averages one year earlier.
The one-year Treasury-indexed ARM climbed three basis points to 5.76 percent.
Fees and points were unchanged at 0.6. One year ago that product averaged 5.57
"Both economic indicators and mortgage rates came in mixed this week,"
said Frank Nothaft, Freddie Mac vice president and chief economist.
"While retail sales were stronger in September, consumer confidence fell
below market expectations in October. Moreover, both the core consumer price
index and producer prices for September remained contained.
"In his October 15th speech, Fed Chairman Bernanke suggested housing would
be a 'significant drag' on the economy going into the next year. Indeed, inventories
of unsold homes remained exceptionally high. And October's homebuilder confidence
fell to the lowest level since 1985, when record keeping began."
MBA's Weekly Mortgage Applications Survey for the week ending October
19, however, showed double digit drops in both of the fixed rate products it
tracks. The 30-year FRM decreased to 6.21 percent with 1.13 points (including
the origination fee) from 6.40 percent with 1.04 points.
The average contract interest rate for 15-year fixed-rate mortgages also dropped
substantially, from 6.09 percent to 5.86 percent although points increased to
1.06 from 1.03.
The rate change for the one-year ARM was less dramatic but that product was
still down seven basis points to 6.10 with points decreasing to 0.92 from 0.94.
Mortgage applications were nearly identical to that of the
previous week on a seasonally adjusted basis although it increased 11.2 percent
on an unadjusted basis and was 11.5 percent higher than the same week in 2006.
The previous week had been shortened by the Columbus Day holiday which accounts
for the slightly skewed numbers.
Refinancing as a percent of all mortgage activity increased to 47.0 percent
from 45.3 percent the previous week and the adjustable rate mortgage share of
the market actually increased to 14.2 percent from 13.5 percent the previous