Freddie Mac reported a decline in mortgage rates this week. "Mortgage rates had room to ease this week following news of a weaker jobs market, which may slow consumer spending and keep inflation at bay," Freddie Mac Chief Economist Frank Nothaft said
Specifically, the 30-year fixed mortgage rate fell 12 basis points to 5.03%, 15-year fixed loans were down eight basis points to 4.64%, 5/1 Hybrid ARMs averaged 4.99% compared with 5.08% the previous week; and one-year ARMs were six basis points lower to 4.80%.
The improvement in mortgage rates should further stimulate mortgage application activity, especially with the help of the government"s housing plan to help borrowers refinance.
Yesterday, the Mortgage Bankers Association reported an increase in mortgage application activity for the week ending March 6 with the Refinance Index rising 13% to 3471 and the Purchase Index higher by 7% to 253.
A combination of mortgage rates declining in the latter part of the week along with the start of President Obama's Housing Plan on March 4 contributed to the gain in activity.
At this time, speeds are projected to increase around 10% on aggregate in April (reported in May) and by 30% in May (reported in June) as the impact of the housing plan really begins to be felt. GNMA prepayment speeds are expected to be relatively flat for both months.