ARM Share Of Mortgage Loan Applications Begins To Slip As Fed Raises Short-term Rates
December 23, 2004
Rest Of The Year Should Be Quiet For The Housing Industry
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 5.75 percent, with an average 0.6 points, for the week ending December 23, 2004, up from last week when it averaged 5.68 percent. Last year at this time, the 30-year FRM averaged 5.82 percent.
The average for the 15-year FRM this week is 5.18 percent, with an average 0.6 points, up from last week when it averaged 5.11 percent. A year ago, the 15-year FRM averaged 5.14 percent.
One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 4.17 percent this week, with an average 0.6 point, down very slightly from last week when it averaged 4.18 percent. At this time last year, the one-year ARM averaged 3.77 percent.
“In November, the ARM share of loan applications slipped to 34 percent from 36 percent in October, in response to the Fed’s sequential actions to push short-term interest rates higher,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As ARM rates began to rise, long-term rates showed no inclination to follow and remained at very affordable and attractive levels.
“Going into the new year, we expect that the ARM share will continue to run at about 30 percent to 35 percent of loan applications and that the Fed will continue to push short-term rates upward for the time being.”
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Source: Freddie Mac