Long term mortgage interest rates took a slight bump upward during the week ended May 29 while the rates for the two short-term products were virtually unchanged according to data released by Freddie Mac as part of its Primary Mortgage Market Survey.
The 30-year fixed-rate-mortgage (FRM) averaged 6.08 with 0.6 point for the week compared with the previous week when it averaged 5.98 percent with 0.5 point.
The 15-year FRM carried an average contract interest rate of 5.66 percent with 0.6 point, up from the previous week when it averaged 5.55 percent also with 0.6 point.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) increased by one basis point to 5.62 percent with fees and points declining from 0.6 to 0.5 point and the one-year Treasury-indexed ARM declined from 5.24 percent to 5.22 percent with fees and points unchanged at 0.6 point.
"Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year," said Frank Nothaft
, Freddie Mac vice president and chief economist. "A recent working paper published by the Federal Reserve Bank of Minneapolis suggested that the recent rate cuts run a risk of unhinging long-term market expectations for inflation. Indeed, market inflation expectations increased over the last few weeks and the federal funds futures market now has a 25 basis point rate hike priced in by the end of the year.
"While existing house prices continue to decline, new home sales unexpectedly rose in April and the number of month's supply of new homes for sale fell from 11.1 months in March to 10.6 months in April. Moreover, the median sales price for new homes rose 1.5 percent in April from the same month in 2007, representing the first yearly increase since November 2007."
According to the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ended May 30, long term rates moved strongly upward.
The MBA survey found that the average contract interest rate for 30-year FRMs increased from 5.96 percent to 6.17 percent with points, including the origination fee, decreasing to 1.06 from 111.
The rate on the 15-year FRM also increased 21 basis points to 5.7 percent with points decreasing from 1.15 to 1.06.
The sole short-term product tracked by MBA ' the one-year ARM ' decreased to 6.8 percent from 6.92 percent with points increasing to 1.44 from 1.42.
Mortgage application volume increased 15.3 percent on a seasonally adjusted basis and decreased 24.2 percent on an unadjusted basis (the week was shortened by the long Memorial Day weekend.) Volume was 20.3 percent lower than during the same week in 2007.
Refinancing applications represented 40.6 percent of all mortgage loan applications compared to 46.1 percent the previous week while applications for ARMs represented only 8.7 percent of total applications compared to 9.3 percent a week earlier.