Yields hit bottom after Brexit, falling from 1.87 percent in late May to 1.37 percent in early July. They have been moving steadily higher since Sept. 29, rising from 1.56 percent on Sept. 29 to 1.79 percent Wednesday. They are still well below where they started the year at 2.24 percent.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that more than two-thirds of the experts it surveyed think rates will continue to rise in the coming week. Mitch Ohlbaum, a loan officer with Macoy Capital Partners in Los Angeles, is one of the panelists who participated in the survey. He noted that 68 percent of the experts think the Federal Reserve will raise rates in December but he isn’t convinced.
“I think the market will continue to anticipate an increase which will drive rates up [until December] but will be surprised when December comes,” he said.
The 15-year fixed-rate average grew to 2.76 percent, with an average 0.6 point. It was 2.72 percent a week ago and 3.03 percent a year ago.
The five-year adjustable-rate average rose to 2.82 percent, with an average 0.4 point. It was 2.8 percent a week ago and 2.88 percent a year ago.
“This week the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases,” Sean Becketti, Freddie Mac’s chief economist, said in a statement. “The 30-year fixed-rate mortgage moved up 5 basis points to 3.47 percent in this week’s survey, the first increase in one month. Even though we’ve seen economic activity pick up, consumer price inflation and implied inflation expectations remain below the Federal Reserve’s 2 percent target.”
Meanwhile, mortgage applications dropped this week, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume –tumbled 6 percent from the previous week. The refinance index fell 8 percent, while the purchase index decreased 3 percent.
The refinance share of mortgage activity accounted for 62.4 percent of all applications.
“Mortgage rates rose to their highest level in a month last week, and refinance application volume dropped to its lowest levels since June as a result,” said Mike Fratantoni, MBA chief economist. “This was driven by recent economic data indicating solidifying U.S. growth and financial markets returning to a view that a December Fed hike is likely. Mortgage rates remain quite low by historical standards, but even a modest increase is sufficient to significantly reduce refinance application volume.”