Most interest rates were down again during the week ended August
17 and 18, but the changes were not nearly as aggressive as immediately after
the Federal Reserve Board's decision to pause in its long term pattern of
quarter-point rate increases.
Freddie Mac's Weekly Primary Mortgage Market Survey for the week ended
August 17 reported that average rate for the 30-year fixed-rate mortgage was
down 3 basis points from the previous week to 6.52 percent with fees and points
decreasing from 0.4 to 0.3. The 15-year fixed rate mortgage was unchanged at
6.20 percent although fees and points for that product also were down to 0.3
from 0.4. The 5/1-year hybrid adjustable rate mortgage moved downward from 6.21
percent to 6.18 percent with fees and points unchanged at 0.4. The largest change
was in the traditional 1-year ARM which went from 5.69 percent to 5.65 percent
with a whopping 0.3 drop in fees and points to 0.5. In most cases these rates
are about the same as were reported in April of this year.
This was the fourth week in a row
that rates have dropped
and the long term fixed rate products are down at least 20 basis points over
Frank Nothaft, Freddie Mac vice president and chief economist commented "This
week's news that July housing starts fell 2.5 percent added conviction to Fed
Fund futures traders who are currently pricing contracts to suggest the chances
of another rate increase from the central bank this year are about fifty-fifty."
"As a result, 30-year fixed-rate mortgages are down for the fourth straight
week and are the lowest they've been since mid-April. Meanwhile, ARM rates have
gone down less. All of which could help persuade homeowners with ARMs on the
verge of resetting to make the decision to lock into a fixed-rate mortgage now
rather than take a chance of a higher rate on the adjustment date."
The Mortgage Bankers Association's Weekly Mortgage Applications Survey
for the week ended August 18 also noted across the board rate decreases.
The 30-year fixed-rate mortgage product took a substantial drop from 6.54 percent
to 6.38 percent with points, including the origination fee, remaining unchanged
at .98 and the 15-year fixed-rate loan declined 11 basis points to 6.04 percent
with points increasing from 1.09 to 1.12. The 1-year ARM pulled back to 5.91
percent from 5.97 percent although fees and points were up slightly to 0.82
All interest rate quotes are for 80 percent loan to value originations.
Mortgage application volume was up a tiny 0.1 percent on a
seasonally adjusted and 1.2 percent unadjusted from a week earlier and continues
to run well behind the pace a year ago. Last week's applications were
down 25.1 percent from the same week in 2005.
The refinance share of mortgage activity increased to 40.6 percent of total
applications from 39.6 percent the previous week. The adjustable-rate mortgage
(ARM) share of activity decreased to 26.4 percent of total applications from
27.2 percent the previous week. The ARM share is currently at its lowest level
since February 2004.