Interest rates as reported by Freddie Mac and those published
by the Mortgage Bankers Association (MBA) diverged sharply for the week ending
June 14 (Freddie Mac) and June 15 (MBA).
Freddie Mac's Primary Mortgage Market Survey concluded there was a double
digit jump in the rates of each of the four products the survey tracks, taking
each to levels last seen nearly one year ago.
The 30-year fixed-rate mortgage (FRM) had an average contract interest rate
of 6.74 percent, an increase of 21 basis points from the previous week. Points
remained at 0.4. This is the highest the 30-year FRM has been since July 20,
2006 when it averaged 6.80 percent.
The 15-year FRM averaged 6.43 percent with 0.4 point compared to the previous
week when it averaged 6.22 percent with 0.4 point. The last time the 15-year
rate was higher was also July 20 when it averaged 6.44 percent.
Adjustable rate mortgages (ARMs) were up a little less dramatically than the
fixed-rate products. The five-year Treasury-indexed hybrid ARM averaged 6.37
percent, an increase of 13 basis points from the week ended June 7. Fees decreased
from 0.6 to 0.5. This is the highest rate for the 5/1 since July 6 when it averaged
The one-year Treasury-indexed ARM averaged 5.75 percent compared to the previous
week when it averaged 5.65 percent. Fees were unchanged at 0.7 point. During
the week ended July 27, the rate averaged 5.78 percent.
"Mortgage rates moved sharply upward this week, with
rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the
largest upward movement in over three years," said Frank Nothaft, Freddie
Mac vice president and chief economist. "These moves parallel rising yields
on Treasury securities, as concerns about inflation pressures and continuing
strength of consumer and business spending have dimmed hopes for an interest
"Higher mortgage rates may weigh on the housing market's gradual recovery.
While demand appears to have stabilized, inventories of new homes remain high,
putting downward pressure on construction and home prices."
However the MBA Weekly Mortgage Applications Survey had a quite different
outcome from the Freddie Mac survey. In the MBA report the 30-year
FRM actually decreased albeit by a mere single basis point to 6.60 percent with
points, including the origination fee, increasing from 1.44 to 1.58.
The average contract interest rate for 15-year FRMs was unchanged at 6.28 percent
with points increasing from 1.39 to 1.42.
The biggest change was in the one-year ARM which more closely mirrored the Freddie
Mac data, rising from 5.48 percent to 5.70 percent with points decreasing from
1.18 to 1.16.
Mortgage application activity was down 3.4 percent on a seasonally
adjusted basis and 4.1 percent unadjusted from the previous week and was up
13.2 percent from the same week in 2006.
Refinancing represented 38 percent of all mortgage activity, the same as the
week before, and the ARM market share rose from 18.7 percent to 20.3 percent.