Rates Head Higher, Freddie Says

Even ARMs see upswing for the week
By ANNE LINEBERRY
7/7/2003

The 30-year fixed rate for mortgages climbed upward for the second week in a row, with 15-year rates marking their third week of upward movement, according to Freddie Mac. The secondary lender also reported a slight rise in adjustable-rate mortgages for the week.

Thirty-year fixed rates averaged 5.40 percent, up 16 basis points over the prior week, according to Freddie's Primary Mortgage Market Survey. The 15-year fixed rate averaged 4.75 percent, the survey said, up 12 basis points. Both averaged half a discount point, Freddie said.

The survey, which covers the week ending July 4, also reported a four-basis point upswing in the one-year Treasury-indexed adjustable-rate mortgage, which averaged 3.49 percent and 0.7 discount points.

More than half of Bankrate.com's experts predict rates will continue to rise. Fifty-five percent of those surveyed foresee rising rates, with 27 percent predicting a downturn and 18 percent expecting no change.

The Market Composite Index of mortgage applications came in at 1635.5 on a seasonally-adjusted basis for the week ended June 27, up from 1554.5 the prior week, according to the Mortgage Bankers Association of America (MBA).

In its Weekly Mortgage Applications Survey, MBA reported increases in all indices tracked, including purchase, government, refinance, and conventional.

Refinances as a percentage of total applications fell slightly, comprising 75.6 percent of all applications, off from 75.8 percent the prior week, the survey said.

Frank Nothaft, Freddie Mac's chief economist, noted the effect of the latest statement by the Federal Reserve Board on factors influencing mortgage rates.

"Last week's Federal Reserve Board's policy statement led financial markets to expect that the economy should begin to pickup soon, and that caused bond yields to rise pretty steadily over the last number of days," he said.

The 10-year Treasury bond yield closed at 3.65% Thursday, up 12 basis points over Wednesday's close of 3.53%. The bond yield closed at 3.53% the prior week as well.

Special Programs