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January 30th, 2013

Mortgage rate hits highest point since September



30While mortgage rates have been rising somewhat consistently over the past few weeks, Keith Gumbinger, vice president of HSH.com, says despite the recent increases, rates should remain low for the foreseeable future.

Rates on the most popular types of mortgages moved higher this week, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by eight basis points (0.08 percent) to 3.63 percent, the series highest average since September 18, 2012. Conforming 5/1 Hybrid ARM rates increased by two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.71 percent.

“There has been an ongoing rally in stock markets of late, which comes at the expense of bonds,” said Gumbinger. “That shift occurs amid signs that the economy is holding fairly steady, and investors seem willing to put more of their money at risk in hopes of better returns.”

Signs that the Eurozone crisis is improving also served to push rates higher this week. As noted in HSH.com’s MarketTrends newsletter, about 30 percent of emergency funds extended to ECB member banks will be repaid at the end of January; that such a sum can be returned to the European Central Banks suggests that the funding crisis there is easing, a positive for economic growth both here and abroad. Still, there are plenty of reasons rates are likely to remain low, if not at absolute bottoms, notes Gumbinger.

“Federal Reserve policies should help keep rates low for the foreseeable future, but it would be wrong to expect them to hold at rock-bottom levels if the economy is growing and financial panics are easing,” he said.

Rates rise, applications fall

Once again, mortgage applications are moving in tandem with mortgage rates. When rates rise, applications tend to fall.

On Monday, we reported a rise in mortgage rates for week ending Jan. 25. On Wednesday, the Mortgage Bankers Association reported that mortgage application declined 8.1 percent for that same week.

Both refinance and purchase application fell from the previous week, 10 percent and 2 percent respectively. Refinances made up 79 percent of total applications, down from 82 percent for week ending Jan. 18. The share of HARP refinances did move up by 1 percent to 26 percent. The share of ARM applications remains unchanged at 4 percent.

Remember, for longer outlook on mortgage rates, be sure to read our Two-Month Forecast for Mortgage Rates.

One Response to “Mortgage rate hits highest point since September”

  1. Charelston SC Realtor Says: January 30th, 2013 at 8:40 pm

    This isn’t good news if we want the housing marketing to stay on the right track. Although, I think the Fed will have to continue to buy bonds if they want to keep the housing market pointed in the right direction.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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