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Posted at 10:00 AM ET, 12/20/2012

Mortgage rates mixed following inflation and housing construction reports

Mortgage rates were mixed in reaction to reports on inflation and the housing construction market, according to the latest data released by Freddie Mac.

The 30-year fixed-rate average climbed to its six-week high, rising to 3.37 percent with an average 0.7 point. It was up from last week when it was 3.32 percent. Last year at this time, it was 3.91 percent. Still, the 30-year fixed rate has averaged less than 3.5 percent the past 13 weeks.

On the other hand, the 15-year fixed-rate average fell, dropping to 2.65 percent with an average 0.7 point. It was down from last week when it was 2.66 percent. A year ago, it was 3.21 percent.

Hybrid adjustable rate mortgages also were mixed. The five-year ARM edged up to 2.71 percent with an average 0.7 point. It was up from last week when it was 2.7 percent.

The one-year ARM fell to 2.52 percent with an average 0.4 point, down from last week when it was 2.53 percent.

“Mortgage rates were mixed this week following data reports on stable inflation and a thriving home construction market,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The 12-month growth in the core consumer price index has remained between 1.9 and 2.1 percent for the past five consecutive months ending in November. Meanwhile, housing starts averaged the strongest three months in November since September 2008, and homebuilder confidence rose in December to its highest reading since April 2008.”

With the rise in rates, mortgage applications fell off sharply after climbing in back-to-back weeks, according to the Mortgage Bankers Association.

The Market Composite Index, a measure of loan application volume, was down 12.3 percent from last week. The Refinance Index plummeted 14 percent, while the Purchase Index decreased 5 percent from the previous week.

The refinance share of mortgage activity dropped to 83 percent of total applications.

“Despite the Federal Reserve’s announcement last week that it would purchase an additional $45 billion in Treasury securities per month as part of its continuing quantitative easing effort, rates increased in the second half of the week,” said Mike Fratantoni, MBA’s vice president of research and economics, in a statement. “As a result, refinance application dropped sharply to the lowest level in over a month.”

By  |  10:00 AM ET, 12/20/2012

 
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