The average interest rate for the five-year adjustable-rate mortgage dropped to a new record low over the past seven days, while fixed-rate mortgages remained flat on a week-over-week basis, according to the latest data from government-backed mortgage giant Freddie Mac. The five-year Treasury-indexed ARM hit 3.22 percent this week, down from 3.25 percent last week and 3.79 percent during the same week one year ago. The previous record low was 3.25 percent in November 2010. Meanwhile, the 30-year fixed-rate mortgage saw an average interest rate of 4.51 percent, up only slightly from last week, when it averaged 4.5 percent, but down from last year’s 4.58 percent. – Sarabeth Sanders [more]

With interest rates poised to rise, lenders and investors in the nation’s $6.8 trillion mortgage-backed securities market will be exposed to significantly more risk, according to a new report from Fitch Ratings. The agency said yesterday that rates are likely to rise over the next several years as a result of record levels of U.S. debt and the beginnings of an upswing in 10-year Treasury yields. For investors in MBS, that means “heightened price volatility, particularly [for] those that are highly leveraged, fund through repo markets, or mark-to-market their holdings,” Fitch said. TRD [more]

Mortgage application volume climbed 5 percent on a seasonally adjusted basis nationwide during the week ending Jan. 14, compared to the week earlier, according to the Mortgage Banker Association weekly applications survey. The uptick in mortgage activity was led by refinancing, which saw a 7.7 percent increase during the same time period. New mortgage purchases declined slightly, dipping 1.9 percent that week. The average 30-year mortgage interest rate stayed relatively flat, dipping to 4.77 percent, from 4.78 percent the previous week. TRD [more]

While average 30-year mortgage rates are still below 5 percent, according to the Mortgage Bankers Association, that’s set to change in 2011, experts say. The MBA has shed some light on what it expects for the mortgage market in the coming year, predicting rates near 6 percent by 2012 and an overall decrease in demand for mortgages throughout the year. And while refinancings have accounted for a whopping portion of mortgage activity in recent months, around 80 percent throughout much of 2010, the MBA predicts a precipitous decline in refis during 2011, shrinking to below 40 percent of total mortgages. [Investopedia via msnbc]

Experts say the weak commercial real estate sales market was supported in part over the past year by low interest rates. But that environment began to change two weeks ago when interest rates jumped by nearly a quarter of a point. In this week’s installment of Insights from The Real Deal, Robert Knakal, chairman of Massey Knakal Realty Services, said the rise in interest rates will push real estate prices down. “A buyer is going to have to offer less money if they still want to maintain the rate of return that they need to achieve on that particular property,” Knakal said. And although interest rates were by no means the only factor in selling a property, it is possible higher rates could lead some sellers to pull properties off the market. “If a seller can’t achieve the price that they need to achieve in order to sell,” he said, “they may take the properties off the market.” (Have a comment about The Real Deal’s new Web feature? E-mail Lauren Elkies at le@therealdeal.com.) [more]

The National Association of Home Builders/Wells Fargo Housing Market
Index declined one point this month, according to statistics released
by the association today. The numbers are down because the first-time
homebuyer tax credit is set to expire in the relatively near future,
interest rates have gone up recently and credit is still tight for home
loans. The declines took place in the southern part of the country,
where the index dropped three points. In the Northeast, the index saw a
one-point gain. TRD 
[more]

The number of people looking to take out or refinance mortgages fell
7.2 percent last week as interest rates rose, according to data
released by the Mortgage Bankers Association today. The average
interest rate increased from the previous week to 5.57 percent for a
30-year fixed-rate mortgage and rose to 5.1 percent for a 15-year
mortgage. The average interest rate for one-year adjustable-rate
mortgages increased to 6.75 percent. Refinancing applications fell 11.8
percent to 59.4 percent, from 62.4 percent the previous week, the
lowest since November. [more]