A Freddie Mac sign stands outside the company's headquarters in McLean, Virginia, U.S., on Tuesday, April 8, 2014. Senator Sherrod Brown, an Ohio Democrat and a member of the Senate Banking Committee, said a bipartisan bill to replace Fannie Mae and Freddie Mac is too complicated and doesn't do enough to address too-big-to-fail concerns or provide assistance for affordable housing. The panel will consider the measure on April 29. Photographer: Andrew Harrer/Bloomberg (Andrew Harrer/Bloomberg)

Mortgage rates were flat this week despite long-term Treasury yields reversing course.

After dipping to 1.56 percent a week ago, the yield on the benchmark 10-year U.S. Treasury note rose for four straight days. As of Wednesday, it had gained 16 basis points since late last week. (A basis point is 0.01 percentage point.)

The bond market sell-off was fueled by better than expected economic data, a Bloomberg report that said the European Central Bank was considering tapering its bond-buying program ahead of schedule, and growing expectations that the Federal Reserve will resume hiking rates later this year.

The movement of long-term bonds usually is one of the best indicators of whether mortgage rates will rise or fall. When yields go up, home loan rates tend to follow.

Bankrate.com, which puts out a weekly mortgage rate trend index, found that nearly two-thirds of the experts it surveyed believe rates will rise in the coming week. Elizabeth Rose, a sales manager at Movement Mortgage in Dallas, is one of the panelists in the Bankrate.com survey who expects home loan rates to go up. “We can expect continued volatility and for now, ever so slightly higher rates will likely prevail,” Rose said.


According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average held steady at 3.42 percent with an average 0.5 point, same as it was a week ago. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.76 percent a year ago. After rising to 3.5 percent three weeks ago, the 30-year fixed-rate average has stayed below that mark since then.

The 15-year fixed-rate average also didn’t move this week, remaining at 2.72 percent with an average 0.5 point. It was 2.99 percent a year ago.

The five-year adjustable rate average slipped to 2.8 percent with an average 0.4 point. It was 2.81 percent a week ago and 2.88 percent a year ago.

“The 10-year Treasury yield leaped to a two-week high following reports of the European Central Bank retreating from its bond-buying program ahead of its initial March deadline,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Over the past two weeks, mortgage rates have remained fairly flat while Treasury yields have fallen and risen. This Friday’s jobs report will provide clarity on whether mortgage rates follow the recent upward trend in Treasury yields.”

Meanwhile, refinances drove an uptick in mortgage applications this week, according to the latest data from the Mortgage Bankers Association.

The market composite index — a measure of total loan application volume — rose 2.9 percent from the previous week. The refinance index increased 5 percent, while the purchase index slipped 0.1 percent.

The refinance share of mortgage activity accounted for 63.8 percent of all applications.

“Nervous investors last week assessed the risk that Deutsche Bank could require a bailout,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. “Rates dipped as a result, with mortgage rates dropping to their lowest level since early July, and refinance application volume jumped almost 5 percent. The level of activity remained below that of the summer’s pace.”

“Purchase application volume was little changed for the week,” Fratantoni said. “The mortgage industry is celebrating the one-year anniversary of the TRID/KBYO regulatory implementation date this week. Purchase application volume last week was almost 14 percent below the same week a year ago. That was the last week for mortgage applications to be covered by the prior disclosure regulations and as a result there was a spike in application activity.”

The MBA also released its mortgage credit availability index (MCAI) this week, which showed lending standards loosened in September. The MCAI increased 1.4 percent to 167 last month. An increase in the MCAI indicates that lending standards are more favorable, while a decrease indicates they are tightening.

“The increase in credit availability in September was driven by more investors offering streamlined refinance programs to borrowers with USDA and FHA loans,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “Streamline programs allow borrowers who have been consistently making their mortgage payments and meet other eligibility requirements, to refinance their existing mortgage into a lower interest rate with reduced documentation requirements. While these programs accounted for most of the increase, we also observed investors continuing their rollout of the new Fannie Mae and Freddie Mac low down payment (97 LTV) loan programs, and some increased availability of jumbo loans.”