It is hard to imagine how two organizations could deviate more on the direction
of mortgage rates than Freddie Mac and The Mortgage Bankers
Association did in their respective reports for the week ending August 10 and
In the wake of the Federal Reserves' decision to halt, temporarily at least,
the clockwork quarter-point increases they have made for months in the federal
funds rate, Freddie Mac's Weekly Primary Mortgage Market Survey noted across
the board drops in rates for three of the four products it tracks. MBA, however,
reported that rates increased for each of the three mortgage products in its survey.
According to Freddie Mac the 30-year fixed-rate mortgage
eight basis points to 6.55 percent with fees and points increasing from 0.3
to 0.4. This is the lowest rate for the 30-year since April 20. One year ago
the rate was 5.89 percent.
The 15-year fixed-rate mortgage averaged 6.20 percent compared to 6.27 percent
the previous week. Fees and points for this product also increased from 0.3 to
0.4. One year ago the 15-year averaged 5.47 percent.
The 5/1-year hybrid adjustable rate mortgage was at 6.21 percent, six basis points
lower than the week ended August 3 with fees and points unchanged at 0.4. The
same week in 2005 the survey reported the rate at 5.40 percent.
Only the 1-year ARM was unchanged in the Freddie Mac survey, remaining at 5.69
percent for the second week in a row. Fees and points did move upward from 0.7
to 0.8. This is a substantial change from the same week last year when the traditional
ARM averaged 4.57 percent.
Frank Nothaft, Freddie Mac vice president and chief economist said that the weaker
than expected jobs report as well as the Fed's decision to pause on raising
rates led to the lower rates. "Lower rates may bring about a rise in refinancing
activity as homeowners with ARMs (that are) getting ready to reset decide to take
advantage by locking into a fixed-rate mortgage now rather than waiting until
the adjustment date when rates may be higher."
Meanwhile, MBA reported that 30-year fixed-rate mortgages were up
nine basis points to 6.54 percent although points, including the origination
fee, went from 1.01 to .98. In spite of the substantial changes in two different
directions, Freddie and MBA are nearly in agreement on the actual rate. 15-year
fixed-rate mortgages increased from 6.10 to 6.15 percent with points unchanged
The 1-year ARM nudged up one basis point to 5.97 percent with points unchanged
All rates quoted are for conforming, 80 percent loan to value mortgages.
Mortgage application activity was up slightly from the previous week; 1.4 percent
on a seasonally adjusted basis and 0.4 unadjusted. Mortgage activity, however,
is still lagging the 2005 pace by double digits; mortgage applications last week
were 25.6 percent lower than during the same week last year.
Refinancing represented 39.6 percent of all mortgage applications
compared to 38.0 the previous week and adjustable rate mortgages claimed the
lowest share of all mortgage activity since February 2004 at 27.2 percent.