It was nice while it lasted but mortgage
rates last week reversed a four week downward trend and made up much of
the ground they lost a week earlier. However, they still remained well below
where they were at the end of 2007 when the four-week slide began.
Freddie Mac's Primary Mortgage Market Survey for the week
ended January 31 reported that the interest rate on the average 30-year fixed-rate
mortgage (FRM) increased 20 basis points to 5.68 percent from one week earlier.
Fees and points were unchanged at 0.4. 30-year rates had fallen steadily since
the week ended December 27 when the average was 6.17 percent.
The 15-year FRM averaged 5.17 percent with 0.4 point, up from the previous
week's average of 4.95 percent with 0.4 point. The average rate on December
27 was 5.79 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) which averaged
5.13 percent with 0.4 point during the week ended January 24 bounced back to
5.32 percent with 0.4 point last week. In late December the rate was 5.90 percent.
One-year Treasury-indexed ARMS increased by 6 basis points to 5.05 percent
with fees and points unchanged at 0.7. Even with this upward move the one-year
is still 48 basis points below the December 27 mark.
"Mortgage rates ended their four-week descent this week, with average rates
on 30-year and 15-year fixed rate mortgages coming up by about 0.2 percentage
points," said Frank Nothaft, Freddie Mac vice president and
chief economist. "This increase completely erased the previous week's decline.
The movement in fixed mortgage rates was broadly consistent with the movements
of Treasury bonds over the week.
"Reinforcing the Fed's resolution to thwart a recession, the Federal Open
Market Committee announced another cut in the target federal funds rate by half
of a percentage point in their most recent scheduled meeting. This came on the
heels of the Fed's rate cut of three-quarters of a percentage point the previous
week, and the shaping-up of a fiscal stimulus package by Congress and the White
House. This cut was in line with market expectations."
The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications
Survey reported that rates were mixed during the week ended February
1, with long term rates increasing while the one-year ARM lost ground.
The average contract interest rate for 30-year fixed-rate mortgages increased
to 5.61 percent from 5.60 percent, with points, including the origination fee,
decreasing to 0.98 from 1.06.
The average contract interest rate for 15-year fixed-rate mortgages increased
to 5.09 percent from 5.04 percent, with points decreasing to 0.92 from 1.12.
The average contract interest rate for one-year ARMs decreased to 5.62 percent
from 5.70 percent, with points remaining unchanged at 0.97.
The volume of mortgage applications reported by survey respondents continues
to be much stronger than this time last year and gets a little better each week.
This past week the Market Composite Index which measures this volume increased
3.0 percent from the previous week on a seasonally adjusted basis and 4.4 percent
unadjusted. Application volume was 73.2 percent higher than the same week in
2007. These increases, however, might be partially accounted for by applicants
submitting multiple requests because of newly tightened underwriting standards.
Applications to refinance mortgages fell back slightly from 73.0 percent of
all applications the previous week to 69.2 percent and, perhaps reflecting the
slight decline in rates, the market share of ARMs increased to 8.8 percent from