Rates improve
By SAM GARCIA
6/7/2002

As fixed rates fell for the third straight week, mortgage applications for home purchases were especially strong. In its survey of mortgage bankers, commercial banks and thrifts, the Mortgage Bankers Association of America (MBA) reported that purchase money applications increased nearly 19% from last week to a new record high.

"Mortgage rates have been under seven percent for the past nine weeks," said Freddie Mac's chief economist, Frank Nothaft. "During that time, mortgage applications for home purchases have continued to reach historically high levels, keeping home sales moving at a vibrant pace."

MBA said that overall loan applications were up 13.6%, and government applications jumped 22.4%.

Stirring up activity were falling mortgage rates; according to Freddie's survey of 125 thrifts, commercial banks and mortgage lending companies, the average 30-year fixed rate mortgage fell five basis points (BPS) to 6.71%. The 15-year fell 4 BPS to 6.18% and remains a hefty 0.53% better than the 30-year.

"Continued accounting woes, job cuts, overseas turmoil, and the lingering threat of terrorism make investors reluctant to flee the safety and security of government bonds," said Bankrate.com's financial analyst, Greg McBride. "This strong demand has kept Treasury yields and mortgage rates low, and pushes them still lower in times of increased investor concern."

Freddie said the average adjustable rate mortgage (ARM) was 4.71%, five BPS better than the prior week. The ARM remains two percent better than the 30-year fixed rate.

Almost two-thirds of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect no change in interest rates during the next five weeks.

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