Bond Yields Push Mortgage Rates Up

""Freddie Mac"":http://www.freddiemac.com released the results of its ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html (PMMS) on Thursday, showing increases in mortgage interest rates for all types of loan products covered in the study.
Frank Nothaft, Freddie Mac's VP and chief economist, attributed the rise in mortgage rates to higher bond yields this week, amid reports of continuing record jobless claims and a downward revision of economic growth in the fourth quarter of 2008.
According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) for the week ending March 5, 2009 averaged 5.15 percent (with an average 0.7 point). This figure jumped from last week when it averaged 5.07 percent. However, last year at this time, the 30-year FRM averaged 6.03 percent.
The 15-year FRM this week averaged 4.72 percent (with an average 0.7 point), up from last week when it averaged 4.68 percent. A year ago at this time, the average 15-year FRM was at 5.47 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.08 percent (with an average 0.6 point). Last week, the 5-year ARM averaged 5.06 percent, and a year ago, it was 5.34 percent.
One-year Treasury-indexed ARMs averaged 4.86 percent this week (with an average 0.5 point), up from 4.81 percent last week. At this time last year, the 1-year ARM averaged 4.94 percent.
Nothaft pointed to that downward revision by the Commerce Department of Real Gross Domestic Product (GDP) as a major contributor to the rate hikes. Originally estimated to be a 3.8 percent contraction, the fourth quarter GDP was amended last week to reflect a 6.2 percent drop, mostly led by a 4.3 percent fall in consumer spending, which was the largest decrease since the second quarter of 1980.
Nothaft added, ""The housing market continues to slow as well. New home sales fell 10.2 percent in January to the slowest pace since records began in January 1963, while pending existing home sales slowed by 7.7 percent, the weakest since the series began in January 2001.
""More recently the Federal Reserve noted in its March 4th regional economic report that residential real estate markets remained in the doldrums in most areas, with only scattered, very tentative signs of stabilization,"" Nothaft said.