Soothing news about inflation was reflected by declining mortgage interest
rates last week, although Freddie Mac and the Mortgage Bankers Association
were in substantial disagreement about the scale of the changes.
According to Freddie Mac's Primary Mortgage Market Survey, the 30-year
fixed-rate mortgage (FRM) averaged 6.17 last week with an average 0.5 point.
During the week ended April 12 the 30-year averaged 6.22 percent with 0.4 point.
The 15-year FRM declined one basis point to 5.89 percent while fees and points
increased from 0.4 to 0.5.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) slipped
very slightly from 5.93 percent with 0.5 point to 5.92 percent with 0.6 point.
The one-year Treasury-indexed ARM averaged 5.45 percent with 0.7 point compared
to 5.47 percent with 0.5 point the previous week.
Frank Nothaft, Freddie Mac vice president and chief economist
said, "Mortgage rates slipped following the latest reports of moderation in
inflation rates from the core producer price and consumer price indexes. Excluding
food and energy, the core inflation rate for consumer prices rose 2.5 percent
year-over-year, the smallest annual growth since May 2006. This helped calm
markets and brought mortgage rates down."
"The low mortgage rates that have prevailed so far in 2007 may have a
stabilizing effect on the housing sector. Both housing starts
and new permits for March came in above expectations, but February's housing
starts numbers were revised downward. Because of weather-induced fluctuations
in housing statistics, we will have to see what the numbers show later in the
Spring to gauge whether the March readings are indeed a signal of market turnaround."
Whether or not it was a direct effect of the slight decline in rates, mortgage
application activity was up a bit from the week before and continued
the substantial recovery from the pace a year earlier. According to the Mortgage
Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending
April 20, applications were up 3.6 percent on a seasonally adjusted basis and
4.1 percent unadjusted from a week earlier. Activity was up 18.2 percent compared
to the same week in 2006.
Refinancing as a share of total volume decreased to 43.3 percent,
0.2 lower than a week earlier and ARM applications were up 0.2, a tiny improvement
amidst the general downward spiral in the popularity of that product.
MBA's survey of rates found that the 30-year FRM decreased to 6.13 percent
from 6.22 percent while points, including the origination fee, increased from
1.22 to 1.32. The average contract interest rate for a 15-year FRM was 5.82
percent with 1.27 points compared to 5.92 percent with 1.18 points the week
before. The one-year ARM dropped ten basis points to 5.79 percent. Points were
up a slight 0.03 to 0.73.