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Market Intelligence

Rates Climb
According to Freddie Mac's Primary Mortgage Market Survey:

• Average 30-year fixed mortgage rate: rose from 6.13% to 6.18% over the seven-day period ended Dec. 28.
• Average 15-year fixed mortgage rate: rose from 5.89% to 5.93%.
• Average 5-year Treasury-indexed hybrid ARMs rate: climbed from 5.96% to 5.98%.
• Average 1-year Treasury-indexed ARMs rate: increased from 5.44% to 5.47%.
• Fees and points: averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.6 of a point for one-year ARMs.
• A year ago, the average 30-year and 15-year fixed rates: 6.22% and 5.76%, respectively.
• Average hybrid and 1-year ARM rates: 5.79% and 5.15%, respectively.

Resales Rise Slightly
Sales of existing homes rose 0.6% in November and inventories of unsold homes fell 1%, providing more signs that the housing market is close to bottoming out. The National Association of Realtors reported that November sales of previously owned single-family homes, condominiums, and cooperatives rose from a seasonally adjusted annual rate of 6.24 million in October to 6.28 million in November -- down 10.7% from the level recorded in November 2005. "It appears from looking at the numbers that existing-home sales hit bottom in September at 6.21 million," NAR chief economist David Lereah said. However, house prices dropped 3.1% in November for the fourth consecutive month, and the NAR economist said he expects to see further price declines in December and possibly in January and February. Meanwhile, the inventory of unsold existing homes has remained relatively stable since July. The number of unsold homes on the market fell 1% to 3.82 million in November, which is a 7.3-month supply at the current sales pace.

Survey: New HELs Jump, HELOCs Drop
New home equity loan account bookings reported in the 20th annual Consumer Bankers Association Home Equity Lending Study jumped 54% in 2006, while new account bookings for home equity lines of credit dropped 24%, according to BenchMark Consulting International, Atlanta. BenchMark said new home equity account bookings fell nearly 5% overall. The study also found that response rates to promotions for home equity loans and HELOCs declined 27% from rates recorded in 2005. "We expect response to marketing for HELOCs and loans to continue to diminish as interest rates rise, and forward-thinking institutions are already pursuing new revenue streams to compensate for this downward cycle," said Brian King, manager of BenchMark's consumer lending practice. "The most value to be attained depends on the institution -- some gain traction quickly with new product offerings, while others see significant returns through streamlined operations." The study includes findings on pricing, marketing, sourcing channels, and delinquencies/chargeoffs, among other factors. Conducted by the CBA in conjunction with BenchMark, the report included 46 participating home equity lenders.

Applications Dive
The Market Composite Index, an overall measure of mortgage applications, fell from 647.6 to 555.8 on a seasonally adjusted basis during the week ended Dec. 22, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. On an unadjusted basis, applications decreased 15.0% on the week but were up 16.6% from the level recorded a year earlier. The Purchase Index fell from 436.5 to 390.2 on a seasonally adjusted basis, while the Refinance Index fell from 1968.8 to 1604.6. Refinancings represented 48.8% of total applications, down from 50.8% the previous week, while adjustable-rate mortgages accounted for 23.1% (the lowest level since October 2003), the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.10% to 6.12%, and points (including the origination fee) rose from 0.93 to 0.96 for loans with 80% loan-to-value ratios, the association reported.

New-Home Sales Up 3.4%
New-home sales jumped 3.4% in November and inventories of unsold homes declined to a five-month low, according to a government report that included upward revisions in the sales numbers for the previous three months. The U.S. Census Bureau reported that new single-family home sales rose from a seasonally adjusted annual rate of 1.01 million in October to 1.05 million in November. While a 6.3-month supply of unsold newly constructed homes is still high, Fannie Mae chief economist David Berson said the November report shows that builders are doing a good job of reducing their inventories. "The housing downturn is not over, but the worst is behind us," Mr. Berson said. The Fannie economist said he does not expect new-home sales to fall much below their recent levels. He is forecasting total new-home sales of 980,000 in 2007, but he conceded that he is considering a "modest" upward revision due to the Census Bureau report.