Freddie Mac: Rates Drop for First Time in Four Weeks

Flagging refinance volumes are expected to get a slight boost from the first drop seen in the average weekly 30-year mortgage rate tracked by the Freddie Mac Primary Mortgage Market Survey since May 20. The drop to 5.38% from 5.59% the previous week reversed part of the weekly primary market rate's recent increase from 4.82% since the second half of May. This is something Credit Suisse researchers said should result in "a modest pickup in refi activity." However, they said they believe that the 30-year rate would have to drop below 5.00% "to trigger a renewed surge in refi activity." Shorter-term rates tracked by Freddie Mac all fell below 5.00% during the week ended June 18, with the average 15-year fixed-rate mortgage rate dropping to 4.89% from 5.06% the previous week; the average five-year Treasury-indexed hybrid adjustable-rate mortgage rate sliding to 4.97% from 5.17% and the average one-year Treasury ARM rate declining to 4.95% from 5.04%. Points for FRMs averaged 0.7 and points for ARMs averaged 0.6. Average 15- and 30-year fixed rates remain below the levels of last year when they were 6.02% and 6.42%, respectively. The five-year Treasury ARM at the same time last year was 5.89% and the one-year Treasury ARM was 5.19%. Pressuring all rates lower in the past week have been "reports of benign inflation figures," according to Frank Nothaft, Freddie Mac's vice president and chief economist. "It's still too early to tell whether the decline in housing has hit bottom yet," he added, noting that recent market indicators have been mixed.