Mortgage Rates Back To November 2005 Levels
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Frank Nothaft, vice and president and chief economist of Freddie Mac credited
declining third quarter Gross Domestic Product figures for a slight drop in
mortgage interest rates for the week ended November 2.
Nothaft said, "With mortgage rates down this week, we may see a spurt
of refinancing by those who want to get
out of ARMS that are scheduled to reset in the next year while interest
rates are still comparatively low."
According to Freddie Mac's Primary Mortgage Market Survey, the 30-year
fixed-rate mortgage (FRM) was down 9 basis points to 6.31 percent
for the week with fees and points unchanged at an average of 0.4 point. This
rate is identical to the average interest rates for the 30-year mortgage one
year ago.
The 15-year fixed-rate mortgage averaged 6.02 percent for the week compared
to the week of October 26 when it averaged 6.10 percent. Points were again unchanged
at 0.4. In November 2005 the 15-year FRM was 5.95 percent.
The rate for five-year Treasury-indexed hybrid ARMs was 6.05 percent with 0.5
point. One week ago it was 6.14 percent with 0.6 points and one year ago it
averaged 5.76 percent. The one-year Treasury-indexed ARM averaged 5.53 percent
with an average 0.6 points, 7 basis points lower than one week ago but much
higher than the 5.09 percent level of the same week in November 2005. Fees and
points last week were 0.6 compared to 0.7 the previous week.
Nothaft also noted that some mortgage activity may be fueled
by homeowners who are refinancing and taking cash out of their homes for remodeling
or other needs rather than using home equity lines with the prime rate now over
8 percent.
Interest rates as reported by the Mortgage Bankers Association for the week
ended November 3 were mixed but with little overall movement. The average contract
interest rate for the 30-year fixed-rate mortgage was unchanged at 6.24 percent
with points, including the origination fee, down from 1.09 to 1.08. The 15-year
fixed rate mortgage was up 2 basis points to 5.96 percent with points decreasing
from 1.03 to 0.97. The largest change recorded by MBA was for the one-year ARM
which decreased from 5.93 percent to 5.89 percent, points dropping to 0.8 from
0.84.
All mortgage rates
are for 80 percent loan to value originations.
Mortgage applications were up from the previous week; 8.8
percent on a seasonally adjusted basis and 8 percent unadjusted. Where activity
had been running 20 to 30 percent below year-over-year figures in the second
and third quarters of the year and 10 to 20 percent in recent weeks, the applications
rate was only off 5 percent last week compared to the same week one year earlier.
Refinancing as a share of all mortgage activity increased
to 46.3 percent from 45 percent the previous week and adjustable rate mortgages
represented 26.4 percent of total applications compared to 25.9 percent the
previous week.
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