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Mortgage rates settle in for the summer

After a big jump to start the year, mortgage rates have settled in for the summer.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average ticked up to 4.53 percent with an average 0.4 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was its first increase in three weeks. The 30-year fixed rate was 4.52 percent a week ago and 4.03 percent a year ago.

The 15-year fixed-rate average rose to 4.02 percent with an average 0.4 point. It was 3.99 percent a week ago and 3.29 percent a year ago. The five-year adjustable rate average jumped to 3.86 percent with an average 0.3 point. It was 3.74 percent a week ago and 3.28 percent a year ago.

Mortgage rates haven’t moved much since April. The 30-year fixed rate has drifted between 4.55 percent and 4.66 percent with incremental increases and decreases each week.

“The 10-year Treasury yield continues to hover along the same narrow range, as increased global trade tensions are causing investors to take a cautious approach,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “This in turn has kept borrowing costs at bay, which is certainly welcoming news for those looking to buy a home before the summer ends.”

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Many experts don’t expect this trend to change anytime soon., which puts out a weekly mortgage rate trend index, found more than half the experts it surveyed say rates will remain relatively stable in coming week. Shashank Shekhar, CEO of Arcus Lending, is one who expects rates to hold steady.

“Weekly fluctuations aside, mortgage rates are almost at the same level they were three months back which is quite in contrast to the first three months of the year when the rates kept climbing,” Shekhar said. “Competing factors have kept mortgage rates from rising in the recent weeks. June Producer Price Index came in at 3.4 percent — the highest level since 2011. This would typically push rates higher, but we have the constant talk of the trade war that is balancing the inflation report. With the NATO meeting also thrown in the geopolitical mix, expect mortgage rates not to change much this coming week.”

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Meanwhile, mortgage applications were up last week, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – increased 2.5 percent from a week earlier. The refinance index fell 4 percent, while the purchase index rose 7 percent.

The refinance share of mortgage activity accounted for 34.8 percent of all applications, its lowest level since August 2008.

“The impact of rising rates is affecting refinance activity,” said David Stevens, MBA president. “In fact, refinance volume dropped to its lowest level since December 2000 last week. Overall, the economy, especially job growth, is strong and that is clearly translating into a purchase market. However, the lack of inventory is still holding back the pace of sales.”

The MBA also released its mortgage credit availability index (MCAI) this week that showed credit availability increased in June. The MCAI rose 0.2 percent to 181 last month. An increase in the MCAI indicates that lending standards are loosening, while a decrease signals they are tightening.

“Mortgage credit loosened slightly, led mainly by an increase in the jumbo MCAI which represented fierce competition among lenders for prime jumbo borrowers,” said Mike Fratantoni, MBA’s chief economist. “However, this loosening was almost completely offset by a decline in credit for government loan programs. The Government MCAI has tightened in recent months, driven largely by policy actions to reduce churning in the Veterans Administration’s Interest Rate Reduction Refinance Loan program.”

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