Purchase apps set new record
By SAM GARCIA
5/10/2002

Applications for refinance mortgage loans jumped 14.1% from last week, according to the Mortgage Bankers Association of America (MBA). In this week's announcement of its survey of mortgage bankers, commercial banks and thrifts, MBA said overall applications were up 8.1%, while government applications rose 14.5%.

MBA reported that purchase applications were up almost 4% to a new record high. "Very favorable interest rates, an improving economy, and good consumer confidence are having a positive impact on the U.S. housing industry," said Phil Colling, an economist with the MBA. "In addition, loan applications are being made now for home purchases in June and July, which are traditionally busy months for home purchases."

After falling for five weeks straight, the average 30-year fixed rate mortgage (FRM) edged up 0.01% -- or one basis point (BPS) -- to 6.79%, according to Freddie Mac's survey of thrifts, commercial banks and mortgage lending companies. The thirty-year average was 7.10% a year ago.

Freddie said the average 15-year mortgage also fell 1 BPS to 6.27%.

"With productivity up, and inflationary pressures muted, the Federal Reserve Board elected this week to not change a key short-term interest rate," said Frank Nothaft, Freddie Mac's chief economist. "Most other economic data releases such as unemployment and manufacturing, painted a slightly negative picture for future economic growth. These factors combined to keep mortgage rates stable."

The one-year adjustable rate mortgage (ARM) rose five BPS to 4.80%, according to Freddie's survey. The spread between the one-year ARM and the thirty-year FRM fell to 1.99% from 2.03% last week.

ARM activity continued to fall, likely the result of attractive fixed rates hovering below seven percent. MBA said 15.1% of all applications were for ARM's, down from 15.4% last week.

According to Bankrate.com's survey of mortgage bankers, mortgage brokers and other industry experts, 42% of its respondents expect no change in rates during the next five weeks, while 37% expect for rates to fall more than 2 BPS and 21% expect for rates to increase.

"Mortgage rates have declined in recent weeks to reflect expectations of a prolonged low-rate environment," said Bankrate.com's financial analyst Greg McBride. "The slower, more measured economic rebound, with inflation remaining well in check, gives the Federal Reserve ample time before enacting any interest rate hikes."

Article © MortgageDaily.com All Rights Reserved