By Amy Hoak, MarketWatch
RISMEDIA, July 16, 2007—(MarketWatch)—Long-term mortgage rates did an about-face this week, moving upward due to a favorable June employment report and robust consumer credit growth in May, Freddie Mac’s chief economist said Thursday.
“In addition, consumer credit jumped by $12.9 billion in May, almost double market expectations,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a news release.
The jump in mortgage rates nearly eliminated declines made in over the past three weeks, he said.
The 30-year fixed-rate mortgage averaged 6.73% for the week ending July 12, up from 6.63% last week, according to Freddie Mac’s weekly survey. The mortgage averaged 6.74% a year ago.
Freddie Mac forecasts the 30-year fixed-rate to stay around its current level for the rest of the year, Nothaft said.
The 15-year fixed-rate mortgage averaged 6.39%, up from last week’s 6.30% average. The mortgage averaged 6.37% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.35%, up from last week’s 6.29% average. The ARM averaged 6.33% a year ago.
Only 1-year Treasury-indexed ARMs held their ground this week, averaging 5.71% — unchanged from last week. The ARM averaged 5.75% a year ago.
To obtain the rates, the fixed-rate mortgages required payment of an average 0.4 point, while the ARMs required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
Also in his comments, Nothaft said that the refinance share of loan applications is expected to continue decreasing through the end of the year, “averaging about 35% in 2007, the lowest level since 2000.”
A separate survey released by the Mortgage Bankers Association on Wednesday reported that loans for refinance made up a 36.2% share of all applications last week, down from 37.8% the week before. The volume of all mortgage loan applications increased a seasonally adjusted 1.1%, according to the MBA, which also reported increasing mortgage interest rates
Taking a look at the bigger picture, Nothaft said Freddie Mac is predicting continued weakness in the housing market in the second half of the year, “with 2007 total home sales and housing starts hitting 5-year lows.”
Copyright© 2013 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.