Mortgage rates have leveled offby Tim Manni
Rates on the most popular types of mortgages eased slightly according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages declined by four basis points (0.04 percent) to 4.57 percent. Conforming 5/1 Hybrid ARM rates also decreased by four basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.42 percent.
Markets have calmed, rates have leveled
“After several strong rises during the past few weeks, mortgage rates have mostly leveled off,” said Keith Gumbinger, vice president of HSH.com. “After a tumultuous period, markets have calmed somewhat and are now intently watching incoming economic data, as is the Fed, looking for clues as to when the Fed will start to taper its purchases of mortgages and treasury bonds.”
The Fed has revealed a couple of signals about policy change timing, including an unemployment rate approaching the seven percent mark or inflation running above the Fed’s two percent speed limit for a period of time. Neither of those conditions is with us at the moment, and there is some concern about reaching those goals while the economy remains in a muted growth pattern.
“Although there are expectations for faster economic growth later in the year, those forecasts may prove to be optimistic,” adds Gumbinger. “Gross Domestic Product for the first quarter was an anemic 1.8 percent, and we may struggle to attain that rate in the second quarter. The economy is moving forward without much momentum, and now has an additional headwind of higher rates and higher gasoline prices. As such, we may not get a burst of growth which compels the Fed to move very quickly. The weeks ahead will be revealing in that regard.”
Refinance applications still falling
Mortgage applications took another dip last week, according to the Mortgage Bankers Association.
Overall, applications declined by 2.6 percent from the week prior. Refinance activity was down 4 percent, and, much like mortgage rates, now sits at a level unseen since July 2011. Purchase applications increased by 1 percent.
Refinance applications continue to wane, falling 1 percent to 63 percent of all applications, its lowest point since April 2011. HARP applications also fell 1 percent, and now represent 34 percent of all refinance applications.
The ARM share of applications increased to 7 percent.