Wednesday, April 23, 2014

Confidence Among U.S. Homebuilders Increases Less Than Forecast

home loans
Confidence among U.S. homebuilders rose less than forecast in April as sales and prospective buyer traffic stagnated, showing the residential real estate market struggled to improve after a harsh winter.

The National Association of Home Builders/Wells Fargo builder sentiment gauge climbed to 47 this month from a revised 46 in March that was weaker than initially reported, figures from the Washington-based group showed today. Readings greater than 50 mean more respondents report good market conditions. The median forecast in a Bloomberg survey called for 49.

Tight credit for some home buyers and limited availability of lots are restraining builder sentiment months after snow storms and freezing temperatures held back construction. At the same time, historically low mortgage rates and hiring gains helped drive an increase in the outlook for sales, the report showed.

“Builder confidence has been in a holding pattern the past three months,” NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Delaware, said in a statement. “As the spring home-buying season gets into full swing and demand increases, builders are expecting sales prospect to improve.”

Estimates (USHBMIDX) in a Bloomberg survey of 49 economists ranged from 48 to 54. The March reading was revised from a prior estimate of 47.

The group’s gauge of prospective buyer traffic held at 32 in April, while the index of current single-family home sales was unchanged at 51.

The measure of the six-month sales outlook improved to a three-month high of 57 in April from 53.

By Region

Builder confidence deteriorated to an 11-month low in both the Midwest and West. Sentiment climbed to a three-month high in Northeast and was unchanged in the South.

Borrowing costs, which climbed in the second half of 2013, are starting to stabilize. The average 30-year, fixed-rate mortgage was at 4.34 percent in the week ended April 10, down from 4.41 percent the prior week, according to data from Freddie Mac in McLean, Virginia. The average from July through December was 4.37 percent.

Warmer temperatures and sustained gains in employment and consumer confidence are keeping mortgage lenders such as San Francisco-based Wells Fargo & Co. upbeat about the market’s prospects.

“The housing recovery remained on track, and should benefit from the spring buying season,” Chief Executive Officer John Stumpf said on an April 11 earnings call. “I’m optimistic about future economic growth, because consumers and businesses have continued to improve their financial conditions.”

A report tomorrow is projected to show housing starts rebounded to a 970,000 annualized pace in March, the first increase in four months, from a 907,000 rate the prior month, according to the median forecast of economists surveyed before figures from the Commerce Department. Starts averaged a 929,000 pace last year.


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Monday, April 21, 2014

JP Morgan using tax payer backed banks to meet new regulations

JP Morgan using tax payer backed banks to meet new regulations
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, is using cheap funding from government-chartered institutions to meet new regulations designed to ensure it won’t need a taxpayer bailout in any future crisis.

The bank borrowed almost $20 billion in the first half of the year from Federal Home Loan Banks, according to filings, almost as much as it got from selling dollar-denominated bonds in 2013. New York-based JPMorgan, with $2.4 trillion of assets, obtained most of the loans from the Federal Home Loan Bank of Cincinnati, whose 740 members typically resemble the $139 million-asset Bank of McCreary County in Kentucky and $40 million-asset Rural Cooperatives Credit Union.

Set up during the Great Depression to help community lenders, FHLBs raise cash by selling bonds viewed by rating companies and investors as backed by the U.S. government. Lending by the Congressionally chartered banks is climbing at the fastest pace since the start of the financial crisis in 2007. The growth has little to do with most of the 7,600 banks, thrifts, credit unions and insurers that are members. Without JPMorgan, Bank of America Corp. and Citigroup Inc., the three largest borrowers, lending by the FHLBs would be shrinking.

Photographer: Victor J. Blue/Bloomberg
Pedestrians walk by the offices of JPMorgan Chase & Co. in New York.
“It’s astounding,” said Joshua Rosner, an analyst at research firm Graham Fisher & Co. and co-author of “Reckless Endangerment,” a 2011 book, which focused on the role in the housing crisis of government-sponsored Fannie Mae. “It doesn’t seem to be in keeping with the system’s mission.”

Top Ratings

FHLBs, cooperative institutions owned by their borrowers, were created in 1932 to provide savings-and-loan institutions with a way of tapping stable funding after a string of failures caused by runs on deposits. Their Washington-based trade group now says the aim “is to support residential mortgage lending and community growth in all areas of the country.”

In 1989, Congress allowed commercial banks to join the network, which comprises 12 regional FHLBs that raise money jointly in the bond market to fund lending to members and their investment portfolios. Because of the perception the government would step in to prevent a default, FHLBs can sell securities at yields similar to Treasuries and the bonds carry the top rating from Moody’s Investors Service and the second-best from Standard & Poor’s, the same as its U.S. ranking.

According to the FHLBs’ Reston, Virginia-based finance office, outstanding debt for the FHLBs grew to $700.6 billion at the end of August from $687.9 billion on Dec. 31, making it America’s second-largest borrower in financial markets after the Treasury Department.

Mortgage Collateral

FHLB loans to members secured by mortgages and other assets, known as advances, climbed $37.1 billion in the first six months of 2013 to $450.7 billion, the latest disclosures show, with loans to JPMorgan, Bank of America and Citigroup (C) expanding $44.6 billion. Total loans climbed a further $19 billion last quarter, Mesirow Financial Inc. strategist Ryan Graf estimated, based on bond issuance.

JPMorgan, a member of four of the FHLBs, joined the Cincinnati branch last year, after gaining the ability to become a member with the 2004 acquisition of Bank One Corp., whose chief executive officer at the time was Jamie Dimon.

As head of JPMorgan, Dimon steered the lender through the housing crash, making it the only major U.S. bank to remain profitable throughout the period. He’s since pushed back against regulations designed to avoid bailouts for the industry and the perception that financial behemoths are too big to fail.

Federal Initiatives

While most banks, including JPMorgan, have repaid loans and investments provided by the government during the crisis, they continue to benefit from other federal initiatives, including the FHLBs and insurance on customer deposits of up to $250,000, a limit temporarily raised from $100,000 during the crisis before later being made permanent.

JPMorgan’s loans from the Cincinnati FHLB increased 64 percent to $42.7 billion in the first half of this year as its total FHLB borrowing climbed to $61.8 billion from $42 billion.

The bank stepped up its borrowing as it sought to use longer-term funding to add to its cash and similar investments to meet new liquidity rules called for by the international Basel III agreement, according to a person familiar with the company’s operations. The loans, which can cost less than similar-maturity unsecured debt, are backed by mortgage collateral, said the person, who asked not to be named because the details are private.

JPMorgan has issued $19.9 billion of senior dollar-denominated bonds this year, according to data compiled by Bloomberg.

Basel Rule

Justin Perras, a JPMorgan spokesman, declined to comment.

The Basel III rule was created to better prepare banks for market disruptions such as the upheaval that followed Lehman Brothers Holdings Inc.’s collapse in 2008. JPMorgan has exceeded the amount of liquid assets needed to meet the new rule since the second quarter, Treasurer Sandie O’Connor said at a recent CreditSights Inc. event, according to the research firm.

The bank isn’t alone among its peers in taking advantage of FHLB funding.

Bank of America, which is a member of five FHLBs, increased its advances by $19.4 billion to $33.8 billion during the first half, while Citigroup, which belongs to three, boosted the amount by $5.3 billion to $25.7 billion, disclosures show.

“We’re constantly borrowing across multiple alternatives to maintain flexibility and efficient funding,” Jerry Dubrowski, a spokesman for the Charlotte, North Carolina-based bank, said in a telephone interview.

Smith Barney

Citigroup’s growth, focused on short-term borrowing, was to prepare for a loss of deposits from Smith Barney customers, after it agreed to sell its stake in the brokerage to Morgan Stanley, according to a securities filing. Mark Costiglio, a spokesman for New York-based Citigroup, declined to comment.

Borrowing by the largest banks is vital to the system, because it creates a “deep and liquid” market for FHLB bonds, which are used to fund loans to all members, said John von Seggern, president of the Council of Federal Home Loan Banks, the system’s trade group.

“The small guys understand how important it is that the big guys belong to the system,” von Seggern said. “You don’t have the traders if you don’t have the volume. If you don’t have the traders you don’t have the market.”

At Cincinnati’s FHLB, demand for advances from members other than JPMorgan has been limited. The “anemic economic expansion” has depressed the amount of loans banks are making while they have inflated deposit levels, according to its disclosures.

Penultimate Lender

That’s been mirrored across the system for the past few years. FHLB loans fell to a 12-year low in 2011 at $403.3 billion, down from a year-end peak of $900.5 billion in 2008.

Advances had previously surged from $641.6 billion at the start of 2007 as members faced a funding squeeze when investors doubted their health. The FHLBs’ role in keeping banks afloat led New York Federal Reserve researchers to call the system the “Lender of Next-to-Last Resort” in a 2008 paper, ahead of the central bank itself.

FHLBs “can expand and contract, that’s what we do,” said FHLB Cincinnati CEO Andrew Howell. At the same time, having a range of member types -- such as big banks like JPMorgan along with small ones, or both deposit-taking lenders and insurers -- limits the challenges that would come from having more homogeneous borrowers that move in “lockstep,” he said.

Lending Cheaply

The perceived government backing and other strengths of FHLB bonds mean that they can lend cheaply to members. On Sept. 30, the Boston FHLB offered 4 1/2-year advances at 1.85 percent, according to its website. That day, JPMorgan’s $1.25 billion of senior unsecured bonds due in January 2018 yielded 2.16 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

FHLB advances, which require collateral exceeding the amount borrowed, have withstood numerous crises, with none ever suffering a loss on the loans, according to von Seggern. Taxpayers get added protection because members are required to buy more stock when taking out advances, making the system “self-capitalizing,” Howell said.

Several of the FHLBs, including those based in San Francisco, Boston and Pittsburgh, have experienced losses in their investment portfolios, according to disclosures. The Chicago and Seattle FHLBs faced formal enforcement actions over mismanagement of aspects of their balance sheets. JPMorgan, Bank of America and Citigroup are among lenders sued by FHLBs over disclosures on mortgage bonds sold before the crisis. The banks deny the claims.

The Federal Housing Finance Agency, which oversees the institutions, monitors large member activity at each “to ensure that the FHLB has the flexibility to maintain safe and sound operations should a large borrower choose not to renew its advances,” Denise Dunckel, a spokeswoman, said in an e-mail.

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Friday, April 18, 2014

Basel Spurs Big-Bank Borrowing From U.S. Home Loan Banks

Basel Spurs Big-Bank Borrowing From U.S. Home Loan Banks
Four of the nation’s largest banks, led by JPMorgan Chase & Co. (JPM), are driving a surge in borrowing from the Federal Home Loan Bank system as they raise funds to buy assets that meet new liquidity requirements.

Lending at the 12 regional Home Loan Banks rose 30 percent to $492 billion between March of 2013 and December 2013, largely the result of advances made to JPMorgan, Bank of America Corp., Wells Fargo & Co. (WFC) and Citigroup Inc., according to a report released today by the Federal Housing Finance Agency Office of the Inspector General.

The concentration of Home Loan Bank lending in four large institutions could present safety and soundness risks, the report said. In addition, auditors questioned whether lenders created to support housing finance should be providing funds so banks can meet standards set under the international Basel III accord.

“The increasing use of advances by members to meet Basel III’s liquidity requirements could raise public concerns about the system’s commitment to its housing obligations,” the report said.

The Federal Home Loan Banks, established by the government in 1932 to support mortgage credit, have an implicit government guarantee, meaning that investors expect they won’t be allowed to fail. They make advances to their 7,500 member financial institutions that can be used to originate home loans or for other purposes.

Citigroup (CITI), JPMorgan, Bank of America and Wells Fargo accounted for 27 percent of total advances from the Home Loan Banks at the end of 2013, up from 14 percent the year before, the report said. Lending to JPMorgan increased the most, to $61.8 billion in December 2013 from $13.3 billion in March 2012.

Basel Requirements

Basel III, approved by U.S. regulators in July, included standards for how much capital banks must have against investments in specific financial products. A related effort still under way in the U.S. would require banks to hold easy-to-sell assets and get a minimum amount of funding from sources unlikely to dry up in a crisis.

The FHFA, which regulates the Home Loan Banks, should publicly release more information on advances to big banks, the report said.


Wednesday, April 16, 2014

Trending: real estate investors key on schools, experts say

Trending: real estate investors key on schools
The adage in real estate goes, "location, location, location", but for Chinese investors looking for US property, it might change to "location, education, and luxury", said real estate marketer Nick Antonicello.

While location is important, wealthy Chinese are now looking for a combination of factors to spot real estate opportunities, one of the primary ones being proximity to quality education, said Antonicello, director of new business at Unique Homes, a luxury housing publication.

Antonicello made his comments on Monday in a panel discussion to at the Waldorf Astoria hotel in New York, part of the 2014 Asian Real Estate Association of America Global and Luxury Summit.
Elizabeth Harrington, North American publisher of the Hurun Report, a Shanghai-based publishing group best known for its annual "China Rich List," said that the Hurun Report now releases a school guide series for its clients as well because of the demand for education information.

"We had wealthy individuals asking us about advice on schools - where to apply to, how to get in, what the process is - and that eventually led us to the School Guide Series," she said. The series compiles listings of top preparatory, secondary, undergraduate and post-graduate schools, and features articles from famous alumni and leading figures at big-name schools.

The West Coast of the US has always had the highest concentration of Chinese and Chinese Americans, and about 50 percent of Chinese real estate buyers focus on California because of the schooling opportunities.

Real estate investors key on schools, experts say
"It is the education. Why is that important? We know that statistically, between 30 and 40 percent of specifically the Chinese students, mom and dad are buying them a house," said Antonicello.

Los Angeles, San Francisco, Pasadena, San Marino, and Arcadia all make up popular destinations in California for Chinese investors, Antonicello said, because of proximity to schools like Stanford University, the University of California at Los Angeles (UCLA), the University of California at Berkeley (UC Berkeley), California Institute of Technology (Caltech), and others. Many California colleges and high schools place highly on US News &World Report's school rankings.

International students make up a $24 billion industry in the US and real estate agents should realize the potential for even more education-fueled real estate investments, said Bill Hunt, international business consultant at Keller Williams Worldwide. "As the world becomes a global economy, the United States and China play the key role in developing education," he said.

Harrington said that realtors should consider the secondary and tertiary markets that Chinese business people can bring, secondary being the children who they want to invest for, and also the employees they may have working for them, who are likely to want to invest in homes themselves.

"Start to think not just in terms of what cities the customers want, but start thinking in terms of a segmented market. It's all interrelated," she said. "It's a pyramid, with the high net-worth people at the top, their children in the middle, and their business employees - who have different price points and different needs - at the bottom."


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Tuesday, April 15, 2014

Lending Plunges to 17-Year Low as Rates Curtail Borrowing

home loans and mortgage rates
U.S. mortgage lending is contracting to levels not seen since 1997 -- the year Tiger Woods won his first of four Masters championships -- as rising interest rates and home prices drive away borrowers.

Wells Fargo (WFC) & Co. and JPMorgan Chase & Co., the two largest U.S. mortgage lenders, reported a first-quarter plunge in loan volumes that’s part of an industry-wide drop off. Lenders made $226 billion of mortgages in the period, the smallest quarterly amount since 1997 and less than one-third of the 2006 average, according to the Mortgage Bankers Association in Washington.

Lending has been tumbling since mid-2013 when mortgage rates jumped about a percentage point after the Federal Reserve said it might taper stimulus spending. A surge in all-cash purchases to more than 40 percent has kept housing prices rising, squeezing more Americans out of the market. That will help push lending down further this year, according to the association.

“Banks large and small are going to have to adapt to a new reality because mortgage origination volumes going forward aren’t going to support the big businesses they’ve had in place for the last few years,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “They’re going to have smaller, leaner operations, and we’re seeing them make that shift.”

At Wells Fargo, home-loan originations exceeded $100 billion for seven straight quarters, ending in June 2013. The figure plunged to $36 billion in the three months through March, the San Francisco-based bank said April 11.

Rising Rates

Wells Fargo’s results show the shift in the housing market away from refinancings as interest rates climb. Just 34 percent of its originations went to customers refinancing loans, compared with 69 percent in the same period of 2013.

Timothy Sloan, Wells Fargo’s chief financial officer, said a combination of forces, including tougher standards following the housing crash, account for the falloff in lending.

“It’s too early to call it a secular shift,” Sloan said in an interview. “This recovery has just been more complicated because of the impact of rates being low, and now they are backing up a little bit. We’ve had a lot of regulatory changes, we’ve had a change in underwriting standards that the market is getting used to.”

The average interest rate for a 30-year fixed mortgage was 4.34 percent last week, up from 3.54 percent a year ago, according to a statement from Freddie Mac.

Cutting Staff

Lenders also are tightening credit standards, requiring higher FICO scores. More than 40 percent of borrowers in 2013 had scores above 760, compared with about 25 percent in 2001, according to a Feb. 20 report by Goldman Sachs Group Inc. analysts Hui Shan and Eli Hackel.

JPMorgan originated $17 billion of home loans in the first quarter of 2014, lower than at any time during the housing crash. The New York-based bank made $52.7 billion of mortgages a year earlier. Marianne Lake, JPMorgan’s CFO, cited severe winter weather as among the reasons for the first-quarter drop.

“We view JPM and WFC’s mortgage banking results as lower than expected,” Keefe, Bruyette & Woods analysts led by Frederick Cannon said Friday in a research note, referring to the bank’s stock symbols. “Mortgage volumes and applications were down materially.”

The lenders are cutting staff in the slump. JPMorgan said it reduced the number of jobs at its mortgage unit by 30 percent, or 14,000 positions, since the start of last year. That includes 3,000 reductions in the first quarter. Wells Fargo said it got rid of 1,100 jobs in its residential mortgage business in the first period.

Cash Deals

JPMorgan projected on April 11 that it will lose money on mortgage production this year because of the drop in demand.

All-cash purchases, dominated by investors, are surging as lending drops. Deals in cash accounted for more than 43 percent of U.S. residential sales in February, up from 20 percent a year earlier, with the most in Florida, New York and Nevada, according to data firm RealtyTrac.

Wells Fargo said last week that it’s seeing more cash buyers in the housing market.

“Some of those cash buyers were investors, both individuals and private equity firms and the like, and that had an impact on home prices,” Wells Fargo’s Sloan said. “If you look at the year-over-year increase in home prices being in the low teens, our folks think probably a third of that increase was due to the impact of investors as buyers.”

Institutional Landlords

Private-equity firms, hedge funds, real estate investment trusts and other institutional landlords have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

Investors focused on the markets hardest hit by the real estate crash, including Phoenix, Las Vegas and Atlanta, and have helped push prices higher in those areas.

“This is an investor-heavy market recovery,” said Daren Blomquist, vice president of RealtyTrac in Irvine, California. “We’ve seen a relatively high percentage of institutional investors as one segment, and regular mom-and-pop investors as another, jumping back in as they see the market hit bottom and start to rise.”

Home prices have surged 23 percent since a post-bubble low in March 2012, according to the S&P/Case-Shiller index. The gains have slowed as climbing values in the past two years started to reduce affordability.


Saturday, April 12, 2014

Wells Fargo, JPMorgan: Low Mortgage Demand Even On Low Rates

Low Mortgage Demand Even On Low Rates
Slack demand for home loans continued to drag on earnings at Wells Fargo & Co. (WFC:US) and JPMorgan Chase & Co. (JPM:US) as the two largest U.S. mortgage lenders grappled for pieces of a shrunken market.

Even as interest rates hovered near historically low levels, new home loans tumbled 67 percent to $36 billion in the first quarter at San Francisco-based Wells Fargo, the biggest originator. JPMorgan posted a 68 percent drop to $17 billion, and the bank predicted it would lose money on mortgage production for the full year.

Both lenders are paring staff to keep expenses in line with demand for loans, which has waned as investors and cash buyers dominate some sales. New York-based JPMorgan said jobs at its mortgage business declined 14,000, or 30 percent, since the start of last year. Wells Fargo set plans to cut 1,100 positions in the most recent three months, which ranked as its worst first quarter for mortgage revenue since 2008.

“The market got off to a slow start,” JPMorgan Chief Financial Officer Marianne Lake said yesterday on a conference call with analysts to discuss quarterly results. “We’re seeing tight housing inventory in some markets, and the purchase market was affected adversely by the severe weather.”

JPMorgan’s first-quarter net income (JPM:US) dropped 19 percent to $5.27 billion, or $1.28 a share, the bank said in a statement. Mortgage revenue plunged 42 percent to $1.57 billion as higher interest rates curtailed refinancing.

Mortgage banking income, which includes originations and servicing, fell 46 percent to $1.51 billion at Wells Fargo. The bank still posted a 14 percent increase in first-quarter earnings, to $5.89 billion, as fewer customers missed payments.

‘Down Materially’

“We view JPM and WFC’s mortgage banking results as lower than expected,” Keefe, Bruyette & Woods analysts led by Frederick Cannon said yesterday in a research note, referring to the banks’ stock symbols. “Mortgage volumes and applications were down materially.”

Wells Fargo ceded market share in 2013 to rivals, dropping to 19 percent of residential mortgage originations from 25 percent, according to data from Bloomberg Industries. JPMorgan rose to 9.5 percent from 9 percent, while Bank of America Corp. advanced to 4.8 percent from 3.7 percent.

Potential customers are finding they’re sometimes bidding for homes against buyers who don’t need debt. All-cash sales made up 35 percent of sales in February and 33 percent in January, according to data from the National Association of Realtors.

Market Shift

“There’s frankly a lot more cash buyers today,” Wells Fargo Chief Executive Officer John Stumpf, 60, said during a conference call with analysts to discuss results. Wells Fargo is optimistic about prospects for the rest of this year because rates are still low, homes are affordable, consumer debt is dropping and employment is rising, the bank told analysts.

Wells Fargo’s results show the shift in the housing market away from refinancings as interest rates rose from last year’s trough. Just 34 percent of its originations went to customers refinancing loans, compared with 69 percent in the same period of 2013. The average interest rate for a 30-year fixed mortgage was 4.34 percent this week, up from 3.54 percent a year ago, according to a statement from Freddie Mac.

JPMorgan fell 3.7 percent to $55.30 yesterday in New York trading, the worst performance in the Dow Jones Industrial Average. (INDU) Wells Fargo gained 0.8 percent to $48.08.


Wednesday, April 9, 2014

Mortgage Rates: rising slightly - still seeing historic lows

Mortgage Rates: rising slightly - still seeing historic lowsAverage U.S. rates on fixed mortgages rose slightly this week but remained near historically low levels.

Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan ticked up to 4.41% from 4.40% last week. The average for the 15-year mortgage increased to 3.47% from 3.42%.

Mortgage rates have risen about a full percentage point since hitting record lows about a year ago.

A report released Tuesday by real estate data provider CoreLogic showed U.S. home prices rose in February from a year earlier at a solid pace, suggesting that a tight supply of available homes is boosting prices despite slowing sales.

Most economists expect home sales to rebound as the weather improves and the spring buying season begins.

The increase in mortgage rates over the year was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced three $10 billion declines in its monthly bond purchases since December. The latest plan is to cut its monthly long-term bond purchases to $55 billion because it thinks the economy is steadily healing.

The Fed also said after its two-day policy meeting last month that even after it raises short-term interest rates, the job market strengthens and inflation rises, the central bank expects its benchmark short-term rate to stay unusually low.

Federal Reserve Chair Janet Yellen made clear this week that she thinks the still-subpar U.S. job market will continue to need the help of low interest rates "for some time." Her remarks signaled that even after the Fed phases out its monthly bond purchases, it has no plans to raise a key short-term rate anytime soon.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage rose to 0.7 point from 0.6 point. The fee for a 15-year loan was unchanged at 0.6 point.

The average rate on a one-year adjustable-rate mortgage edged up to 2.45% from 2.44%. The average fee held steady at 0.4 point.

The average rate on a five-year adjustable mortgage increased to 3.12% from 3.10%. The fee remained at 0.5 point.