Rates on fixed-rate mortgages dropped slightly this week, hitting new lows for the year, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.
While lower rates often trigger applications for refinancing, purchase loan demand also picked up last week and was slightly stronger a year ago, a separate survey by the Mortgage Bankers Association showed.
Freddie Mac’s survey showed rates on 30-year fixed-rate mortgage averaged 4.6 percent with an average 0.7 point for the week ending May 26, down from 4.61 percent last week and 4.84 percent a year ago.
Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, before climbing to a 2011 high of 5.05 percent in February.
Rates on 15-year fixed rate mortgages averaged 3.78 percent with an average 0.7 point, down from 3.8 percent last week and 4.21 percent a year ago. Rates on 15-year mortgages hit an all-time low in records dating back to 1991 of 3.57 percent in November.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 3.41 percent with an average 0.5 point, down from 3.48 percent last week and 3.97 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.
Rates on 1-year Treasury-indexed ARM loans averaged 3.11 percent with an average 0.5 point, down from 3.15 percent last week and 3.95 percent a year ago.
Looking back a week, the MBA’s weekly Mortgage Applications Survey showed applications for purchase loans climbed a seasonally adjusted 1.5 percent during the week ending May 20 compared to the week before. Purchase loan applications were up 3.1 percent from the same time a year ago.
Demand for refinancings was also up slightly, to the highest level since Dec. 10. Requests for refinancings accounted for 66.8 percent of all mortgage loan applications, the highest share since Jan. 28.
In a May 18 forecast MBA economists said they expect rates on 30-year fixed-rate mortgages to rise to an average of 5.5 percent during the final three months of this year, and continue a gradual rise to an average of 5.9 percent during the fourth quarter of 2012.