In spite of the Dog Days of Summer, mortgage activity held up fairly well for
the week ended June16, down only a tiny bit from that reported for the previous
week. Applications, however, continued to show double-digit differences from the
same week in 2005.
Freddie Mac's Weekly Primary Mortgage Market Survey reported an average rate
for its 30-year fixed rate mortgage of 6.63 percent compared to 6.62 percent
the previous week. Fees and points remained unchanged at 0.5. The 15-year fixed-rate
mortgage increased two basis points to 6.25 percent with fees and points unchanged
at 0.6. The 5/1-year ARM and the 1-year ARM were each up three basis points
to 6.23 and 5.66 percent respectively but, while fees and points for the 5/1
remained unchanged at 0.5, the 1-year dropped from 0.8 to 0.6.
"Mixed economic indicators are causing some volatility in financial markets,"
according to Freddie Mac's vice president and chief economist Frank Nothaft.
"This invariably leads to the fluctuations in mortgage rates
like what we have seen recently. Still, there has been no drastic movement in
mortgage rates and we see nothing on the horizon that would bring about any
extreme rise or fall in rates going forward."
And, as Mr. Nothaft stated, in spite of the weekly fluctuations in the rates
reported by Freddie Mac, most products have actually traded in a very narrow
margin of ten or so basis points over the last eight or nine week.
Regional variations continued the pattern of recent weeks.
The North Central region recorded the highest average rates in three of the
four loan categories; 10 basis points higher than the national average for both
fixed rate mortgages and a full 20 basis points (6.43 percent v 6.23 percent)
for the 5/1 loan. The Southeast was again the winner at three to four basis
points below the country as a whole. In the one-year ARM category, however,
the Southwest had an average rate of 5.75 percent (9 basis points higher than
the national rate) while the low was scored in the Northeast at 5.63 percent.
However, the differences between the averages reported by the Mortgage Bankers
Association and Freddie Mac this past week look like the two surveys were taken
on different planets, particularly when it comes to the ARM.
The average rate for 30-year fixed rate mortgages as reported by MBA increased
12 basis points to 6.73 percent with points up 0.01 to 1.14 from the survey
for the week ended June 9. This is the highest rate reported by MBA in this
category since May 10, 2002. 15-year fixed rate mortgage jumped 10 basis points
from 6.27 to 6.37 percent, the highest reported since April, 2002. Points, including
the origination fee decreased from 1.13 to 1.10. All rates are for 80 percent
loan to value originations.
The most striking difference between the MBS and Freddie Mac
survey results was in the category of one-year ARMS. While, as noted above,
Freddie reported the most recent rate at 5.66 percent, MBA's survey placed the
average rate at 6.22 percent, compared to 6.09 percent the previous week.
Mortgage applications were down a scant 0.8 percent on a seasonally adjusted
basis and 1.6 percent unadjusted as compared to a week earlier but declined
26.8 percent from the same week in 2005,
Refinances represented 35.5 percent of all mortgage applications compared to
35.7 percent the previous week and applications for adjustable rate products
declined to 29.6 percent from 30.7 percent.