Friday, April 9, 2010
Rates Headed Up...for How Long?
In the wake of the end to the Fed’s $1.25trn mortgage-backed securities (MBS) purchase program, mortgage rates jumped in two weekly surveys.
The Freddie Mac (FRE: 1.37 +2.24%) weekly survey put the average interest rate for a 30-year fixed-rate mortgage (FRM) at 5.21% with an average 0.6 point for the week ending April 8, up from the previous week, when the average was 5.08%, and up from the same time last year, when the average rate was 4.87%. It’s the highest average rate for 30-year FRM since August 13, 2009, when it averaged 5.29%. It is the fourth week Freddie’s rates have inched upward.
Mortgage rates followed bond yields higher amid a positive March employment report, said Frank Nothaft, Freddie Mac vice president and chief economist.
“Following its extension in early November of last year, the homebuyer tax credit is showing some impact on housing market activity, mostly through the use of government-insured mortgages, which tend to be a favorite among first-time homebuyers,” Nothaft said.
“Compared to the week ending December 4, 2009, which was the first week after the original expiration date, mortgage applications for home purchases are up 17% for the first week in April of this year for government-insured loans, compared to an 11% decline in conventional loans, according to the Mortgage Bankers Association,” he added.
The Bankrate.com survey of large banks and thrifts put the average rate for a 30-year FRM at 5.35% with a 0.47 origination point, up from last week’s average of 5.23%. Last year, Bankrate.com’s survey had the 30-year FRM at 5.2%. Over the past three weeks, the Bankrate.com average increased one quarter of a percentage point.
Freddie said the 15-year FRM averaged 4.52% with an average 0.6 point, up from last week when it averaged 4.39%. Last year, the 15-year FRM averaged 4.54% with an average 0.6 point, up from last week when it averaged 4.39%, but down from the average rate of 4.54% one year ago. It’s the highest average rate for 15-year FRM since the week ending December 31, 2009, when it averaged 4.54%.
Bankrate.com put the average rate for a 15-year FRM at 4.69% with a 0.47 origination point, up from last week’s average of 4.53%.
Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25% this week with an average 0.6 point, up from last week when it averaged 4.1%. A year ago, the 5-year ARM averaged 4.93%. In addition, Freddie said the one-year Treasury-indexed ARM averaged 4.14% this week with an average 0.5 point, up from last week when it averaged 4.05%. At this time last year, the 1-year ARM averaged 4.83%.
Bankrate.com said the five-year ARM averaged 4.55% with an average 0.47 origination point, up from last week’s average of 4.51%.
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