For the third week in a row mortgage rates
to both Freddie Mac and the Mortgage Bankers Association. The reductions each
week have not been large, but they have returned rates back to those not seen
since late July.
Freddie Mac's Weekly Primary Mortgage Market Survey for the week ended
September 1 found average rates for a 30-year fixed mortgage to be 5.71 percent,
compared to 5.77 for the week of August 17. Fees and points did increase from
0.5 to 0.6. The 15-year fixed rate was down from 5.35 to 5.32 percent and fees
and points declined 0.1 to 0.5. The 5/1 ARM was unchanged at 5.30 percent as
were frees and points at 0.6. The 1-year ARM was the big winner, down 8 basis
points to 4.48 percent. Fees and points remained unchanged at 0.7.
The Mortgage Bankers Association Weekly Mortgage Applications Survey for the
week ended September 2 echoed Freddie Mac's report. 30-year fixed rate
mortgages decreased to 5.64 percent from 5.73 percent for the previous week
with points dropping from 1.19 to 1.13. MBA's information on fees and
points includes origination fees and all statistics are for 80 percent LTV loans.
15-year fixed rate mortgages decreased a (relatively) whopping 18 basis points
to 5.18 percent from one week earlier. Points also decreased but much more modestly
from 1.19 to 1.14. 1-year ARMS also dropped to 4.81 percent from 4.88 percent
and points decreased very slightly from 1.06 to 1.05.
Most economists are saying that interest rates probably will, at a minimum
stabilize but more likely decrease in light of the incredible devastation wrought
by Hurricane Katrina. While Federal Reserve actions have had little impact on
mortgage rates in recent months, the Board is expected to pass on additional
incremental rate increases at its meeting next week and fears of the spreading
impact of Katrina are likely to discourage increases in longer-term interest
The Mortgage Bankers Association reported that mortgage loan applications
bumped up 6.8 percent on a seasonally adjusted basis last week and 5.4 on an unadjusted
basis. Applications improved 11.8 percent over the same week in 2004, but this
improvement, was running well below the 20 percent plus increases in applications
noted earlier in the year.
Refinancing activity represented 44.8 percent of all mortgage applications
compared to 43.8 percent a week earlier and the ARM share of activity decreased
to 26.5 percent from 27.8 the previous week.