Interest rates were up slightly this week according to the
Freddy Mac Primary Mortgage Market Survey for the week ended October 26. The
30-year fixed-rate mortgage (FRM) ended the week averaging 6.40 percent compared
to 6.36 the previous week. One year ago the 30-year FRM averaged 6.15 percent.
The 15 year FRM came in at 6.10 percent, 4 basis points higher than the week
ended October 19. One year ago the 15-year was at 5.69 percent. Fees and points
for both 15-year and 30-year products averaged 0.4 last week compared with 0.5
the previous week.
The 5/1 Treasury-indexed hybrid
adjustable rate mortgage (ARM) averaged 6.14 percent compared to 6.11 percent
a week earlier. Fees and points increased to 0.6 from 0.5. The 1-year ARM averaged
5.60 percent with 0.7 point compared to 5.57 with 0.8 points the week before.
Last year at this time the 5/1 and the 1-year averaged 5.63 percent and 4.91
Frank Nothaft, Freddie Mac vice president and chief economist commented that
the Federal Reserve at its meeting last week again declined to raise rates for
the third time, "citing a slowdown in the housing market". For instance,
the median price of both new and existing homes in September posted significant
decreases. And some areas of the country may experience a few bumps up and down
as the housing industry corrects itself in the coming months.
"On a positive note, new home sales in September came
in at a higher-than-expected pace, while the number of homes for sale on the
market dropped. This should help support housing prices going forward."
In recent months Freddie Mac and the Mortgage Bankers Association (MBA) have
almost always been at odds on the short term direction of rates, although their
ultimate conclusions on a long-term basis remain pretty much in synch. The two
reports – MBA’s is called the Weekly Mortgage Applications Survey
– again ran recorded contrary directions for the same week.
The average contract rate for 30-year FRMs dropped to 6.24 percent, a decline
of 12 basis points from the previous week with points, including the origination
fee, rising moderately to 1.09 from 1.04. 15-year contract rates were down 9
basis points to 5.94 percent while points were off a scant .01 to 1.03.
The average contract interest
rate for one-year ARMs declined to 5.93 percent from 5.97 percent, with
points decreasing to 0.84 from 0.90.
All survey responses were for 80 percent loan to value originations.
Mortgage activity as measured by loan applications fell 3
percent on a seasonally adjusted basis and 3.3 percent unadjusted from the previous
week and 11.2 percent loss from rate recorded one year ago. This continues a
pattern of losses in the 10 to 15% range evidenced in recent weeks; a significant
improvement over the 20 percent plus year-over-year declines we saw witnessed
in the late summer.
Refinancing as a share of overall mortgage activity decreased to 45 percent
from the rate of 45.6 one week ago. Adjustable rate applications represented
25.9 percent of total applications compared to 26.1 percent the previous week.