Mortgage Rates Resume Slow Decline - Application Volume Increases
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After a single "up" week, long term interest rates have resumed
the slow downward pattern that began the week ending July 20.
Freddie Mac's Primary Mortgage Market Survey for the week ended September
recorded an average rate of 6.43 percent for the 30-year fixed-rate mortgage.
This is 3 basis points lower than the previous week and the lowest level the 30
year has reached since the week ending April 6. Points moved up from 0.4 to 0.5.
One year ago the 30-year averaged 5.74 percent.
The 15-year fixed-rate product averaged 6.11 percent, down from 6.16 percent the
week ended September 7. Points were unchanged at 0.4. The same week in 2005 the
15-year averaged 5.32 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM)
declined from 6.14 percent to 6.10 percent with points increasing from 0.5 to
0.6. One year ago the 5/1 ARM averaged 5.26 percent.
Finally, the average of the one-year Treasury-indexed ARM was 5.60 percent this
week compared to 5.63 percent the week before with points unchanged at 0.7. This
is 1.17 points higher than one year ago.
Frank Nothaft, Freddie Mac vice president and chief economist said, "Although
30-year mortgages
rates are about three-fourths of a percentage point higher than they were
last year, it's good to keep in mind that rates have dropped from the high of
6.80 percent reached just eight weeks ago. And with short-term interest rate
increases seemingly on hold, for a while at least, interest rates overall should
not experience any big shifts in either direction.
"The risk to our forecast of relatively stable mortgage rates
is that inflation will unexpectedly heat up, causing bond markets to raise their
expectations that the Fed will intervene by raising short-term rates. In that
case, mortgage rates will again start to rise."
The Federal Reserve was scheduled to meet on September 20 and the Conventional
Wisdom was that it would continue to hold rates steady as it did at its last meeting.
As so often happens with the two weekly surveys we track, The Mortgage Bankers
Association's (MBA) Weekly Mortgage Applications Survey for the week ending
September 15 reported that rates were moving in the opposite
direction.
MBA's survey found that the average contract interest rate for 30-year fixed
rate mortgages moved up 4 basis points from the previous week to 6.36 percent
with points, including the origination fee, increasing from 1.06 to 1.11. The
15-year fixed rate mortgage averaged 6.04 percent compared to 5.98 percent for
the week ending September 8. Fees and points edged down from 1.08 to 1.06.
The one-year ARM did lose one basis point, averaging 5.95 percent with points
decreasing to 0.77 from 0.82.
All rates are for loans with 80 percent loan to value ratios.
Mortgage activity improved slightly, up 2 percent on a seasonally
adjusted basis from the previous week and 12.3 percent on an unadjusted basis.
(The previous week had been a short one due to the Labor Day holiday.) Applications
continued well off the pace of 2005 - down 22.5 percent last week compared to
the same week one year earlier.
Refinancing activity was up sharply, representing 43.7 percent of all applications
compared to 40.3 percent the previous week. ARMs represented 17 percent of all
applications compared to 25.5 percent the previous week.
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