Fixed-rate mortgage interest increased again during the week ended June 19 according to results from the Primary Mortgage Market Survey released by Freddie Mac.
The 30-year fixed-rate mortgage (FRM) jumped from 6.32 percent to 6.42 percent with fees and points unchanged at 0.7. This was the highest rate for the 30-year since September 27, 2007 when the average was also 6.42 percent.
The 15-year FRM averaged 6.02 percent for the week, 9 basis points higher than the 5.93 recorded one week earlier. Fees and points moved from 0.6 to 0.7. The last time the 15-year FRM was higher was the week ended October 18, 2007 when it averaged 6.08 percent.
Short-term variable rate mortgage rates also increased. The five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.89 percent with 0.6 point. During the week ended June 12 the rates averaged 5.70 percent with 0.7 point. This is also the 2008 high for the product; the last time the average was higher was the week ended December27, 2007 when it was 5.90 percent.
The one-year Treasury-indexed ARM averaged 5.19 percent with 0.6 point. The previous week the average was 5.09 percent with 0.6 point. The one-year rate equaled or exceeded this rate several times in late May of this year.
"Fixed-rate mortgage rates continued to climb this week to the highest point in nearly nine months following the release of May's consumer and producer price indexes, both of which showed stronger levels of inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "Additionally, consumer prices rose 0.6 percent last month, the most since November 2007, and traders began to fully price in a Federal Reserve rate hike by the end of September, based on the federal funds futures market.
"Meanwhile, the housing market still struggles. New construction of single family (1-unit) homes fell in May to the weakest pace since January 1991 and April's starts had a downward revision."
While Freddie Mac's survey showed long-term rates setting new records for the year, the Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association said that its respondents showed that rates decreased across the board during the week ended June 20.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.39 percent from 6.57 percent, with points, including the origination fee, increasing to 1.12 from 1.10.
Rates for the 15-year fixed-rate mortgages decreased to 5.95 percent from 6.14 percent, with points increasing to 1.16 from 1.10.
The average contract interest rate for one-year ARMs decreased to 7.09 percent from 7.22 percent, with points increasing to 1.59 from 1.56.
Mortgage applications fell 9.3 percent on both a seasonally adjusted and unadjusted basis from one week earlier and were down 25.3 percent compared with the same week in 2007.
Refinancing as a share of all mortgage applications fell again, with those applications representing 36.3 percent of all applications. Applications for adjustable-rate mortgages stayed in the single digits; ARM activity decreased to 8.5 percent from 9.7 percent of all applications.