In perhaps the only good news in the mortgage and real estate worlds this week,
both long and short term interest rates for the week ended July 19 barely budged
from their positions a week earlier.
With hedge funds that had heavily invested in residential mortgage-backed
securities literally bleeding dry and subprime
lenders announcing severely reduced earnings expectations, layoffs, or worse,
more or less static interest rates had to be seen as good news.
Freddie Mac’s Primary Mortgage Market Survey concluded that the 30-year
fixed-rate mortgage (FRM) averaged 6.73 percent with 0.4 point for the week.
Both rate and points were unchanged from the previous week and the interest
rate was 7 basis points below the average for the same week in 2006.
The 15-year FRM averaged 6.38 percent, one basis point lower than the week
ended July 12. Fees and points were unchanged at 0.4. One year ago the 15-year
FRM averaged 6.80 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) was unchanged
at 6.35 percent and 0.5 point; one year ago the rate was one basis point higher.
The one-year Treasury-indexed ARM averaged 5.72 percent compared with 5.71 percent
the previous week. Fees and points were unchanged at 0.5. This was 9 basis points
lower than the one-year ARM average a year ago.
Frank Nothaft, Freddie Mac vice president and chief economist commented that,
"In a week marked by stock indexes reaching new highs on Wall Street, mortgage
rates lingered near the previous week's level as the latest economic
indicators did not affect inflation expectations significantly. June's core
producer price index inched up higher than market expectations, pushing the
year-over-year growth rate to 1.8 percent, while the core consumer price index
held steady at a 2.2 percent annual growth rate.
"The most recent statistics suggest that the housing market has yet to
reach a trough. Although June's housing starts unexpectedly rose to 1.47 million
units, construction of one-unit houses still saw a decline of 0.2 percent: At
1.15 million units, it was the slowest pace since January. Building permits
fell by 7.5 percent last month to the lowest level since June 1997."
Very similar news came from the Mortgage Bankers Association’s Weekly
Mortgage Applications Survey for the week ended July 20. The average contract
interest rate for the 30-year FRM was reported to be down from 6.61 percent
to 6.59 percent with points, including the application fee, decreasing from
1.6 to 1.55.
The 15-year FRM also decreased, averaging 6.24 percent with 1.43 in points compared
to 6.29 percent with 1.33 points the previous week.
The average contract interest rate for one-year ARMs increased to 5.62 from
5.60 percent, with points increasing to 1.13 from 1.11.
Mortgage application activity was off substantially from the
previous week; a seasonally adjusted decline of 3.6 percent, 3.5 percent unadjusted.
The trend was, however, still up from the pace one year ago with 13.1 percent
more applications received.
Refinancing represented 38.5 percent of total applications, up from 37.7 percent
a week earlier and adjustable-rate mortgages held a 21 percent share of the
market, unchanged from one week earlier.