Mortgage rates continue to inch upwardby Tim Manni
Rates on the most popular types of mortgages were slightly higher or flat compared to last week according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by four basis points (0.04 percent) to 3.67 percent. Conforming 5/1 Hybrid ARM rates were unchanged, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.71 percent.
Good news is the culprit
“A smaller rise in fixed rates this week, but for much the same reason as the larger one last week, with good news about the economy being the culprit again,” said Keith Gumbinger, vice president of HSH.com. “As the economic outlook slowly improves, investors are less inclined to stash cash in bonds as they look for greater returns, and that, in turn, lifts yields and mortgage rates.”
There’s nothing at the moment that suggests a continuing rise for mortgage rates, notes Gumbinger.
“Even if the negative initial reading for GDP during the fourth quarter of 2012 can be disregarded, we are at best still in a slow-growth pattern with little forward momentum. Couple this with current Federal Reserve policy to keep mortgage rates low and plenty of fiscal challenges yet to be addressed, and it seems unlikely that rates can go much higher that what we have presently.”
Mortgage applications rising once again
It has been interesting following the pattern of mortgage applications over the last few weeks. Mortgage application volume is a good indicator of consumer behavior. Over the last few weeks, mortgage applications have declined as mortgage rates rose.
However, this week, despite an upward move in rates, applications not only increased, but purchase applications were at their highest point in over two years.
According to the Mortgage Bankers Association’s Market Composite Index, a measure of mortgage application volume, over applications rose by 3.4 percent for the week ending Feb. 1.
Refinances increased by 4 percent, while purchase applications increased 2 percent, putting it at its highest level since May 7, 2010.
Refinances continued to dominate the overall share of applications, decreasing just one percent to 78 percent for the week. The share of ARM applications remained unchanged at 4 percent.