Conforming 30-year breaks six-week riseby Tim Manni
Rates on the most popular types of mortgages moved in opposite directions according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by two basis points (0.02 percent) to 4.06 percent, breaking a six-week rise. Conforming 5/1 Hybrid ARM rates increased by six basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average 2.86 percent.
‘It’s all up to the Federal Reserve’
“It’s all up to the Federal Reserve at this point,” said Keith Gumbinger, vice president of HSH.com. “Signals about the fate of the Fed’s quantitative easing program will hopefully be revealed at the end of the FOMC meeting today, but the message there may be as ambiguous as the economic data has been lately.”
The Federal Reserve is expected to begin to taper its purchases of mortgage-backed securities and Treasury bonds before the year is out, but speculation has grown that it will come sooner, prompting the recent spike in mortgage rates. Mortgage rates rose from near-record lows in early May to a high, just last week, not seen in more than a year.
“Depending upon how clear the message is today about the fate of QE3, the pause in mortgage rate increases may be brief,” adds Gumbinger. “However, we think any details about the Fed’s plans will be vague, as they may want more data to assess any damage done to home sales or refinancing — as a result of the recent run-up in mortgage rates — before making any changes to the program.”
Mortgage applications moved lower last week
It’s no surprise that mortgage applications were down again last week since mortgage rates finished the week on the rise.
The Mortgage Bankers Association reported Wednesday that mortgage applications fell 3.3 percent for the week ending June 14. Both the refinance and purchase share of applications were down 3 percent from the week prior.
Refinances continue to represent 69 percent of all mortgage applications, while ARM activity remained unchanged, representing 7 percent of total applications. HARP applications increased to 31 percent–from 29 percent—of all refinance applications.