Don’t let a few extra dollars a month stop youby Tim Manni
Our latest Market Trends newsletter warned we were in for a rate increase this week. Our forecast was correct. According to our latest weekly mortgage rates report, there was a sizeable increase in rates from the week prior.
Rates on the most popular types of mortgages rose sharply this week according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages increased by nine basis points (0.09 percent) to 3.73 percent. Conforming 5/1 Hybrid ARM rates rose by 10 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.72 percent.
Stocks are hot
“Solid economic data continues to take its toll on bond markets, driving mortgage rates higher this week,” said Keith Gumbinger, vice president of HSH.com. “When major stock market indicators run at or near record highs, it’s a fair bet that mortgage rates won’t be running toward record lows.”
Although the bump in rates is unwelcome as we approach the traditional spring homebuying season, good news about the economy in general, and housing markets in specific, are far more important than a small rise in rates.
“Fixed rate mortgages have only returned to levels we celebrated as new record lows just last year, so there’s no reason for grave concern at the moment,” added Gumbinger. “A few extra dollars in a monthly mortgage payment shouldn’t be enough to keep any home purchase or refinance from happening.”
Refinance applications at lowest point in months
After a surge in applications the week ending March 1, it’s no big surprise that mortgage applications retreated last week.
According to the Mortgage Bankers Association’s Market Composite Index, a measure of mortgage loan application volume, applications overall fell 4.7 for the week ending March 8. Purchase applications were down 3 percent while the refinance index was down 5 percent.
“The announcement of stronger than anticipated job growth last week led to an increase in interest rates, with the 30 year fixed mortgage rate in our survey reaching the highest level in more than six months,” Mike Fratantoni, MBA’s vice president of research and economics, said in a statement. “Refinance applications declined as a result, but remain high given the steady flow of HARP applications.”
Refinances continued to dominant the share of overall mortgage applications, representing 76 percent. However, that figure is at its lowest point since May 2012. The share of HARP applications grew to 30 percent, and ARM activity increased for the first time in a while, representing 5 percent of all applications.