Mortgage rates near 2013 highsby Tim Manni
Rates on the most popular types of mortgages moved upward, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by seven basis points (0.07 percent) to 3.68 percent. Conforming 5/1 Hybrid ARM rates increased by three basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.62 percent.
“After reaching lows for the year just four weeks ago, and despite plenty of mixed economic signals, 30-year fixed mortgage rates have quickly moved back to near this year’s highs,” said Keith Gumbinger, vice president of HSH.com. “Rising stock markets, with their promise of better returns, continue to draw investor money out of safe-haven investments such as bonds. Yields are increasing as a result, pulling mortgage rates along with them.”
Gumbinger adds “Even with upward and downward moves this year, mortgage rates remain near record lows, and that can be expected to continue until we get reliably solid growth, inflation begins to appear or the Fed begins tapering its support. None of those conditions seems imminent.”
Refinance index is falling fast
It’s no surprise that mortgage applications declined last week as each mortgage product surveyed by HSH.com posted some form of an increase.
According to the Mortgage Bankers Association weekly application survey, applications were down nearly 10 percent overall for the week ending May 17. Purchase applications were down 3 percent from the week prior while refinance applications were down 12 percent.
“Mortgage rates increased to their highest level since March last week, leading to the largest single week drop in refinance applications this year,” Mike Fratantoni, MBA’s Vice President of Research and Economics, said in a statement. “The refinance index has fallen almost 19 percent over the past two weeks and is back to its lowest level since late March. Purchase activity declined over the week but is still running about 10 percent above last year’s pace at this time.”
Finally, while the HARP share of refinance applications increased from 30 percent to 32 percent, the refinance share of mortgage activity overall fell two percent, landing at 74 percent for the week.