Strong March Employment Pushes Mortgage Rates Upward This Week - 4/13/2007 - Mortgage Loan Refinance Debt Equity

Strong March Employment Pushes Mortgage Rates Upward This Week

The 15-year FRM this week averaged 5.90 percent with an average 0.4 point, up from last week when it averaged 5.87 percent. A year ago, the 15-year FRM averaged 6.14 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.93 percent this week, with an average 0.5 point, up slightly from last week when it averaged 5.92 percent. A year ago, the 5-year ARM averaged 6.13 percent.

One-year Treasury-indexed ARMs averaged 5.47 percent this week with an average 0.5 point, up from last week when it averaged 5.44 percent. At this time last year, the 1-year ARM averaged 5.61 percent.

"Interest rates in general ticked up following the release of the March employment data, which showed stronger job growth than what the market expected," said Frank Nothaft, Freddie Mac vice president and chief economist. "This brought interest rates on 30-year fixed-rate mortgages (FRMs) back up this week to match the first quarter average."

"Mortgage refinancing still remains strong. The 30-year FRM rate has remained below 6-1/2 percent since mid August 2006, which helps explain why the share of total mortgage applications for refinance has remained above 40 percent since last August. Among those borrowers who are choosing to refinance now, a large share are doing so to avoid an adjustment to their monthly payment as the initial period on their adjustable-rate loan expires or to extract equity through a cash-out refi. In the fourth quarter of 2006, 84 percent of borrowers who refinanced their prime conventional loans increased their loan balance by more than 5 percent, totaling more than $70 billion in equity extracted. We expect a similar numbers for the first quarter of this year."