Fixed-rate mortgages (FRM) sank a bit this week as home construction picked up, Freddie Mac reported Thursday.
[IMAGE]According to Freddie Mac's ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/, the 30-year FRM averaged 3.37 percent (0.7 point) for the week ending October 18, down from the previous week when it was 3.39 percent.
The 15-year FRM also fell, averaging 2.66 percent (0.6 point) this week compared with 2.70 percent in the last survey.
Adjustable-rate mortgages (ARM) actually lifted a bit, with the 5-year ARM averaging 2.75 percent (0.6 point) from 2.73 percent before. The 1-year ARM average inched up a single basis point to 2.60 percent (0.4 point).
Frank Nothaft, VP and chief economist for Freddie Mac, said the minor adjustments stem from growth in home construction.
[COLUMN_BREAK]Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace in four years, and single-family starts in from January through September were up 23 percent from the same period last year. Homebuilder confidence also rose, hitting its highest level since June 2006.
""Bankrate's"":http://www.bankrate.com/ survey showed rate increases all around this week as Treasury yields spiked. The 30-year fixed averaged 3.62 percent (up from 3.59 percent), and the 15-year FRM averaged 2.91 percent (up from 2.88 percent before). Meanwhile, the 5/1 ARM posted a 2.72 percent average, up from 2.68 percent.
Analysts and lenders ""surveyed"":http://www.bankrate.com/news/rate-trends/mortgage.aspx by Bankrate are split on their predictions for next week, with the ""Up"" and ""Unchanged"" groups each capturing 43 percent of the vote.
""Positive news in the housing market should put some upward pressure on rates, but I don't expect any major jumps,"" said Polyana da Costa, senior mortgage reporter for Bankrate.com. ""QE3 is doing a good job in holding rates down.""
Very few analysts seem to believe the Federal Reserve ""upcoming FOMC meetings"":http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm will influence rates.
""The Federal Reserve's rate-setting committee meets October 23 and 24, and they're not going to do anything unpredictable,"" said Holden Lewis, assistant managing editor for Bankrate.com. ""I'll ignore the epistemological implications of that prediction, and say simply that in the absence of surprise, mortgage rates will remain steady.""