Mortgage rates rise slightly, refinance apps downby Tim Manni
Rates on the most popular types of mortgages held mostly firm 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 4.50 percent. Conforming 5/1 Hybrid ARM rates were unchanged, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.38 percent.
“Awaiting clear economic signals or direction from the Federal Reserve, mortgage rates are rather aimless at the moment,” said Keith Gumbinger, vice president of HSH.com. “The ending of the Fed meeting today will probably not provide much new information about how quickly the end will come for the Fed’s Quantitative Easing program, but there is plenty of fresh data which might kick them in one direction or the other.”
Unexpected rise in GDP
The report covering Gross Domestic Product today and, especially, the July employment report on Friday, are important, notes Gumbinger.
An unexpected uptick in the national Gross Domestic Product report on Wednesday, a measurement of the nation’s economic growth, only strengthens the argument for the Fed to start trimming QE purchases of mortgage-backed securities and Treasury bonds in September.
“An employment report (due out Friday) that shows stronger hiring or a reduction in the unemployment rate would lean in favor of reducing buying sooner than later. As such, a strong report would likely push mortgage rates somewhat higher, probably back toward the two-year highs of a few weeks ago.”
Refinance index down 55 percent from recent peak
While there’s still another few days yet till we see the employment report, we do have access to the latest mortgage application numbers from the Mortgage Bankers Association.
According to the MBA, overall applications decreased by 3.7 percent during the week ending July 26. The refinance fell by 4 percent, while the purchase index was down by 3 percent.
“Mortgage rates were little changed last week, but remain roughly one percentage point higher than they were three months ago,” Mike Fratantoni, MBA’s vice president of research and economics, said in a release. “Refinance application volume continues to decline, with the refinance index now more than 55 percent lower than its recent peak, reaching the lowest level in over two years. Applications for home purchases dropped for the fourth time in five weeks, but purchase volume is running about 5 percent higher than last year at this time.”