World troubles can be a mortgage borrower’s best friendby Tim Manni
Rates on the most popular types of mortgages climbed slightly upward according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by five basis points (0.05 percent) to 4.66 percent. Conforming 5/1 Hybrid ARM rates increased by six basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.47 percent.
“After a strong bounce last week, mortgage rates are stabilizing at the moment,” said Keith Gumbinger, vice president of HSH.com. “Last Friday’s report, which showed a 13.4 percent decline in new home sales for July, is our first indication that higher mortgage rates are having an effect on the housing market. If housing is slowing, the Federal Reserve’s expected process of ‘tapering’ QE may become a more protracted process, or begin later than mid-September.”
World troubles abound
Stock markets have been unsteady of late, given the unfolding situation in Syria and across the Middle East, which has added uncertainty about any political or military moves which may be implemented.
“Troubles in the world can be a mortgage borrower’s best friend,” adds Gumbinger. “Worried investors often park cash in U.S. Treasuries as a safe haven, driving yields down and dragging mortgage rates along with them. So far, this action by investors has been enough to slow last week’s rise; should it persist, mortgage rates may actually be lower later this week.”
Refinance applications down 64 percent from peak
Mortgage applications continue their downward slide, according to the latest weekly report.
Overall application declined 2.5 percent during the week ending August 23, reported the Mortgage Bankers Association on Wednesday. While the purchase index was down just 2 percent, the refinance index decreased by 5 percent, and is now down 64.2 percent from its recent peak on May 3, 2013.
Despite the steep increase, the refinance of mortgage application ticked lower by just 1 percent from the week prior, landing at 60 percent, the lowest share in over two years. The HARP share of all refinance applications moved up one percentage point to 35 percent.