Fixed-rate mortgages break six-week slideby Tim Manni
Rates on the most popular types of mortgages took divergent paths this week according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by two basis points (0.02 percent) to 3.53 percent. Conforming 5/1 Hybrid ARM rates decreased by four basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.57 percent.
“After a pretty solid report on hiring in March, and a decline in the unemployment rate to 7.5 percent, fixed-rate mortgages broke a six-week slide,” said Keith Gumbinger, vice president of HSH.com. “Although some firming of fixed rates will continue this week, we will remain very near record lows, and certainly well within 2013 ranges.”
The latest Federal Reserve survey of Senior Loan Officers noted that lending conditions for mortgage borrowers eased slightly in the first quarter of 2013. Some of that modest easing may be reflected in more aggressive pricing for ARMs, which continued their own downward trend this week, pressing deeper into record low territory.
“Although few ARMs are being originated at the moment, lenders tend to keep them on their books, so they retain full control over the price and terms of the product”, adds Gumbinger. “Within reason, this allows lenders to price products at very competitive rates. At today’s rates, and for certain borrowers, a 5/1 ARM may be a very good choice.”
According to the latest figures from the Mortgage Bankers Association, the share of ARM applications increased during the week ending May 3, moving up to 4 percent of total applications.
Mortgage activity is up
On a weekly basis, mortgage activity was up all around at the end of last week. It’s not all that surprising since mortgage rates set all types of records during the week ending May 3.
According to the Mortgage Bankers, purchase applications were up 2 percent, reaching their highest level since May 2010. Refinance applications increased 8 percent and sit at their highest point since December 2012. “The gain in the Refinance Index was due to increases in both the conventional and government refinance indices of 8.8 percent and 5.7 percent respectively,” reported the MBA in their weekly release.
Refinances now make up 76 percent of all applications. HARP refinances occupy 30 percent of refinance applications, a 4 percent decline from the previous week.
It makes you wonder, “Will we even need the HARP refinance by 2014?”