Longer term mortgage rates were up again, albeit only slightly,
during the week ending January 18 according to Freddie Mac's Primary Mortgage
Market Survey. Despite the tiny increments the market has seen over the last
four or five weeks, each of the mortgage products tracked by Freddie Mac has
reached the highest levels seen since early to mid-November.
The 30-year fixed-rate mortgage (FRM) averaged 6.23 last week, compared to
the week ending January 11 when it averaged 6.21 percent. The most recent rate
is 13 basis points higher than it was one year ago.
The 15-year fixed-rate mortgage averaged 5.98 percent, also a 2 basis point
increase from a week earlier. One year ago the average was 5.67 percent.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMS) had an average
contract interest rate of 6.04 percent, 1 basis point than a week earlier.
One-year Treasury-indexed ARMs averaged 5.51 percent, however,
which was a marked increase over the previous week's 5.44 percent. At this time
last year, the one-year ARM averaged 5.18 percent.
Points for all products were unchanged at 0.4 for the FRMs and the 5/1 hybrid
and 0.5 for the 1-year ARM.
Frank Nothaft, Freddie Mac vice president and chief economist
said that the latest positive economic reports caused the slight upward movement
in rates. "Shoppers bustling through the holiday season boosted December's
retail sales above consensus expectations. In the same month, industrial production
reversed a three-month decline and rose faster than had been anticipated."
"Expected inflation also contributes to interest-rate movements. In the
coming year, we expect inflation on average to remain moderate at 2.5 percent,
barring shocks from the energy sector, but concerns over the level of core inflation
will continue to cause mortgage rates to fluctuate."
The Mortgage Bankers Association reported fairly similar average
rates in its Weekly Mortgage Applications Survey for the week ended January
19. 30-year FRMs increased 3 basis points to 6.22 with points, including the
origination fee, decreasing slightly to 0.97 from 0.98 while the 15-year FRM
increased from 5.92 percent with 0.99 points to 5.93 percent with 1.02 points.
One-year ARMS took a larger leap with the average contract interest rate increasing
to 5.91 percent from 5.85. Points remained unchanged at 0.81.
All reported rates are for 80 percent loan to value originations.
Loan application activity decreased 8.4 percent on a seasonally
adjusted basis from the previous week and 5.7 percent unadjusted (the week coincided
with the Martin Luther King holiday). Compared to the same week one year earlier
activity was up 3.8 percent.
Refinancing activity slowed from representing 49.9 percent of all mortgage loan
applications during the week ended January 12 to 47.8 percent. Adjustable rate
mortgages also lost market share, down from 21.2 percent to 20.3 percent.