Freddie Mac reported today that 30-year fixed mortgage rates averated 5.14% or an averate 0.7 point, which is down six basis points from last week.
Rates remain at their lowest since the end of May when the 30-year rate was 4.91%. Mortgage rates have declined 45 basis points in the past five weeks.
The 15-year fixed mortgage rates and one-year ARM rates also fell six basis points to a respective 4.63% and 4.76% average, while five-year hybrid ARMs rose one basis point to 4.83%.
Yesterday, the Mortgage Bankers Association (MBA) reported an 18% jump in the Refinance Index to 2009 for the week ending July 10 in response to the recent improvement in 30-year fixed mortgage rates. However, the Purchase Index fell 9% to 259.
Activity is expected to be sticky around current mortgage rate levels. The prospect that rates below 5% appear low at this time could encourage more activity as borrowers might be inclined to act versus several weeks ago, especially since mortgage rates are projected to increase through the remainder of the year and into next.
At the same time, however, borrowers are facing unemployment issues, declining home prices, and tight credit standards, among several other mitigating factors.
In their July outlook, the MBA projects the 30-year fixed mortgage rate to average 5.4% and 5.5%, respectively, in the third quarter and the fourth quarter, up from a 5.0% average in the second quarter, and versus a previous projected average rate of 5.3% for both 3Q09 and 3Q09.
The higher mortgage rate levels have led the MBA to reduce its outlook for mortgage originations as well. The 1-4 family mortgage originations have been adjusted downward from the June forecast to $625 billion in the third quarter versus a previous estimate of $890 billion, and the fourth quarter's $534 billion from $614 billion. For the year, the MBA now estimates origination at $2.3 trillion versus an expectation of $2.7 trillion in their June outlook.
In 2010, the MBA predicts mortgage rates to steadily climb higher to a 5.6% average in Q1 to 6.0% by the fourth quarter. Mortgage originations are expected to fall to $2.2 billion for that year at this time.
