Mortgage rates rise. Is this the end of refinancing?by Tim Manni
Rates on the most popular types of mortgages pushed higher again, 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 4.68 percent. Conforming 5/1 Hybrid ARM rates increased by four basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.50 percent.
“Mortgage rates are fluctuating in a seesaw pattern even as they continue to slowly rise,” said Keith Gumbinger, vice president of HSH.com. “Mortgage rates are back to levels last seen in spring 2011, but have been holding in a fairly narrow range over the past four weeks.”
Stock, bond and mortgage markets have been searching for clues as to where the economy is going, and as to what the Federal Reserve will do with regard to its programs of accumulating mortgage-backed securities (MBS) and Treasury bonds. With the most recent economic data somewhat warmer in tone but not universally strong, it’s by no means clear where they are going or how fast we will go there.
“The Federal Reserve meets next week to sort it all out,” added Gumbinger. “Odds are good that they will begin to ‘taper’ purchases of MBS and Treasuries, but probably only by a small amount, perhaps $5 billion, to start. If markets should react favorably, they will probably continue along this modest path during the fall, possibly reducing purchases somewhat more quickly if the economy warrants and markets continue to behave.”
Refinance applications tank
Mortgage applications saw a major drop off last week, according to the Mortgage Bankers Association.
The MBA reported a decrease of 13.5 percent for the week ending September 6. Refinance applications were down 20 percent last week as the MBA’s Refinance Index is down 71 percent from its peak in early May. Refinance applications are at their lowest point since June 2009. The share of refinance applications is down to 57 percent of all applications.
Purchase applications decreased 3 percent from one week earlier.