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January 9th, 2013

Fixed-mortgage rates still rising

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30The upward trend in mortgage rates continues this week. On Monday, we reported that rates finished the week ending Jan. 4 on the rise. The after effects of the “cliff” deal continue to pressure fixed interest rates higher.

According to HSH.com’s latest mortgage rates report, the two most popular types of mortgages moved in different directions the week ending Jan. 8.

Rates on the most popular types of mortgages moved both up and down this week, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by six basis points (0.06 percent) to 3.55 percent. Conforming 5/1 Hybrid ARM rates decreased by a single basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at average 2.67 percent.

“With a partial deal reached to pull us back off the “fiscal cliff,” markets breathed a sigh of relief,” said Keith Gumbinger, vice president of HSH.com. “Money flowed out of safe-haven hiding places in Treasuries and back into stocks, lifting yields and mortgage rates a little.”

The agreement reached last week covered the tax portion of the program, but a broad agreement on spending cuts was kicked down the road for a couple of months. A deal on spending cuts may happen at a time when fighting over the raising the nation’s debt ceiling is in full swing, so the present optimism may fade in coming weeks.

“This mild flare higher in mortgage rates has already started to retreat somewhat. With Federal Reserve programs fully in place to keep overall and especially mortgage rates low it continues to be a fantastic opportunity to buy a home or refinance,” said Gumbinger.

Mortgage applications bounce back

It’s no surprise that the Mortgage Bankers Association reported a sizeable increase in applications Wednesday. Potential buyers and refinancers tend to put their transactions on hold over the holiday season. We’ll be curious to see two things:

  1. If application volume continues to trend upward as we move away from the holidays
  2. If applications hold up despite some increases to rates we’ve already seen and may continue to see

According to the MBA, for the week ending Jan. 4, overall mortgage applications were up 11.7 percent from the week prior. Purchase applications were up 10 percent and refinance applications were up 12percent.

Refinances continued to account for the lion’s share of mortgage applications at 82 percent, unchanged from the week prior. The percentage of HARP refinance applications edged down 2 percent to 25 percent of refinance applications for the week.

As Gumbinger said, it continues to be a fantastic time to buy a home or refinance.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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