Home-loan rates head up for first time in 10 weeks
By Steve Kerch, CBS.MarketWatch.com
Last Update: 11:30 AM ET June 26, 2003
CHICAGO (CBS.MW) -- The benchmark 30-year mortgage edged higher for the first time in 10 weeks this week, according to a Freddie Mac survey, and consumers in the market are likely to see even sharper increases given a rise in rates in the bond market.
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Freddie Mac (FRE: news, chart, profile) on Thursday said the 30-year fixed-rate loan averaged 5.24 percent for the week ending June 27, up from 5.21 percent a week earlier. The national average on the 15-year loan was 4.63 percent, up from 4.62 percent.
But the one-year Treasury-indexed adjustable-rate mortgage edged even lower to another record at 3.45 percent, down from 3.51 percent. All three loans required the payment of 0.6 points, on average.
Freddie Mac's survey, though, does not reflect the jump in interest rates on the 10-year Treasury note that has occurred in the day since the Fed announced its latest interest-rate cut. Those yields, which mortgage rates closely track, have jumped close to one-quarter of a percentage point. See Bond Report.
"There were further signs this week that the economy may be finally taking a turn for the better," said Frank Nothaft, Freddie Mac chief economist. "Evidence of this change in momentum can be seen in the Fed's remarks yesterday that it was taking a neutral bias in terms of future intervention."
"Meanwhile, new-home sales broke yet another record in May, while existing home sales were stronger than expected. This was primarily due to phenomenally low mortgage rates last month. Yet today we are experiencing rates that are about 1/4 of a percentage point lower, which suggests that housing will continue at its stellar pace."
The slight rise in rates took some of the steam out of the mortgage market last week. The Mortgage Bankers Association of America said its index measuring mortgage-application activity fell about 8 percent in the week ending June 20.
Seasonally adjusted applications for home-purchase mortgages edged down just 2 percent, but the refinancing component of the index tumbled a little over 10 percent. Applications, though, were still running about double their pace of a year ago.
Refinancing activity represented 75.8 percent of total applications, falling from 77.3 percent the previous week. The share of adjustable-rate mortgage activity increased to 15.6 percent from 14.4 percent.
In the MBA survey, the average interest rate for 30-year fixed-rate mortgages increased to 5.10 percent from the previous record low of 4.99 percent one week earlier, with points increasing to 1.62 from 1.58 (including the origination fee) for 80 percent loan-to-value ratio loans. The MBA survey covers about 40 percent of the U.S. mortgage market. |
