30-year average 5.57%
By COCO SALAZAR
2/11/2005

Mortgage rates fell and may continue their descent in the short run as one industry giant has lowered its forecast for the 30-year average this quarter.

The 30-year fixed-rate mortgage averaged 5.57% -- down 6 basis points within the past week to the lowest level since last April, according to Freddie Mac's latest survey of 125 mortgage-lending thrifts, commercial banks and companies.

The 30-year has not risen above six percent in at least six months, Freddie chief economist Frank Nothaft pointed out.

While Freddie still expects the 30-year to average 6.0% for the year, its February forecast has this quarter's average at 5.8% -- 10 BPS below the prediction last month.

The 15-year reportedly slipped 4 BPS to 5.10%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage average was reported at 4.99%, nudging down 1 BPS from last week, Freddie reported.

Falling for the first time in five weeks, Freddie said the 1-year Treasury-indexed ARM sunk 12 BPS to 4.11%.

In an explanation of the lower rates across the board, Nothaft said, "January's employment figures came out lower than expected, allowing bond yields to fall even further. This, in turn, caused mortgage rates to perform somewhat differently than we had expected."

At the close Thursday, the 10-year Treasury note traded at a price of 99.28 with a 4.08% yield. The figures are the same as early morning last Friday, when after the labor report turned out with about 44,000 less jobs than expected, the 10-year Treasury-bond yield had tumbled to 4.08%.

This week at Bankrate.com, half of the 100 surveyed mortgage "experts" predicted that over the next 30 to 45 days rates will remain about the same (plus or minus 2 BPS), while one-third foresaw a rise and the rest (17%) thought rates will fall further.

Mortgage applications were up 4% higher for the week ending Feb. 9, raising the Market Composite Index to 735.9, the Mortgage Bankers Association reported. The index, however, is below the level of 797.8 a year ago, despite that the 30-year was 9 BPS higher than its current level.

While purchase money requests edged up 1% from the previous week, more mortgage hunters were interested in refinancing their loan -- as reflected in the Refinance Index's 8% increase.

The refinance share of mortgage activity was unchanged, while the ARM share nudged down to 32%.

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