Rates reach record, apps near record
By ANNE LINEBERRY
5/23/2003

As rates fall further into record territory, Americans continue to complete loan applications at a feverish pace.

Once again, mortgage interest rates hit record lows this week, according to Freddie Mac's Primary Mortgage Market Survey. The 15-year fixed rate fell to new record, down to 4.73 percent, 11 basis points off last week's number, according to the survey. Thirty-year rates followed suit, down 11 basis points to close the week at a record 5.34 percent. Both rates averaged seven-tenths of a point, the survey said.

Refinances continued to dominate the market. The Mortgage Bankers Association of America's (MBA) Weekly Mortgage Application Survey measured refinances at 76 percent of all origination activity for the week ended May 16, back up from 72.4 percent the prior week. Their seasonally-adjusted Refinance Index increased to 8351.1 from 7250.0 one week earlier.

Overall, the Market Composite Index of mortgage loan applications closed up at 1562.8, 145 points higher than the prior week, the statement said. However, the Government and Purchase indices were both down slightly on a seasonally-adjusted basis, according to the release.

"Interest rates are now at 45-year lows, and consumers are definitely taking advantage these rates. MBA now expects 2003 to be yet another record year in terms of mortgage originations," said MBA economist Phil Colling.

This week mortgage industry analysts are light on rate predictions, though media reports have focused on Federal Reserve Board Chairman Alan Greenspan's comments to a congressional committee Wednesday.

Greenspan acknowledged that the Fed is considering the implications of a remote possibility of deflation in his address to the Joint Economic Committee. He said that even if the federal funds rate approaches zero, the board could utilitze other options to stave off deflation, including buying up long-term Treasury securities.

The 10-year Treasury Note, currently sailing in record waters, closed yesterday at 102 18/32 to yield 3.31%.

At Bankrate.com, rate predictions are again mixed, with about half of the mortgage industry experts predicting a continued slide. A little more than a third predicted rates would go up; the remaining 18 percent predicted stability in the coming week.

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