Mortgage rates surged this week resulting from all the credit turmoil. The 30-year fixed mortgage rates wiped out almost half of the last two-week's of declines.
Freddie Mac reported that the 30-year rate surged 31 basis points to 6.09%. The 15-year fixed mortgage rate jumped 42 basis points to 5.77%, five-year hybrid ARM rates increased 35 basis points to 6.02%, and one-year ARM rates averaged 5.16% compared with 5.03% last week.
Mortgage application activity is expected to see further weakness in the Mortgage Bankers Association's report next week for the week ending Sept. 26.
As mortgage rates began to rise last week amidst increasing fears about the nation's financial health, application activity was impacted with the Refinace Index falling 11% to 2043, after surging in the previous week by 88% to 2300 in response to that week"s plunge in mortgage rates to 5.93% from 6.35%.
Still, the plunge in mortgage rates is expected to have substantial impact on speeds, particularly 6% and 6.5% coupons, in October (released in November).
Current estimates have October speeds jumping over 60% in FNMAs from September's average, about twice as much as previously predicted.
Regarding the premium coupons, speeds are expected to be impacted by increased buyout activity from the GSEs, which has been on hold for sometime due to their capital situation, as well as, from delinquent refinancing through the Federal Housing Administration.
