Although home loan rates were obstinately charting their own path for a while, they have started to fall more in line with long-term bonds. Mortgage rates typically follow the movement of the yield on the 10-year Treasury.
Home loan rates are not tied to the federal funds rate but they often move higher immediately after a rate hike because investors view the rate hike as a signal of a strong economy.
The 15-year fixed-rate average climbed to 3.42 percent with an average 0.5 point. It was 3.32 percent a week ago and 2.96 percent a year ago. The five-year adjustable-rate average rose to 3.23 percent with an average 0.4 point. It was 3.14 percent a week ago and 2.92 percent a year ago.
“For the first time in weeks, the 30-year mortgage rate moved with treasury yields and jumped 11 basis points to 4.21 percent,” Sean Becketti, Freddie Mac chief economist, said in a statement. “The strength of Friday’s employment report and the outcome of next week’s FOMC meeting are likely to set the direction of next week’s survey rate.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found that 90 percent of the experts it surveyed believe rates will move higher in the coming week.
“Mortgage rates continue to move higher on positive economic news,” said Elizabeth Rose, branch manager Movement Mortgage. “The upcoming jobs report later this week could create more pressure on mortgage bonds and push rates higher.”
Meanwhile, mortgage applications increased last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — rose 3.3 percent. The refinance index grew 5 percent to its highest level since December, while the purchase index moved 2 percent higher.
The refinance share of mortgage activity accounted for 45.4 percent of all applications.
The MBA also released its mortgage credit availability index (MCAI) this week that showed credit availability increased in February. The MCAI rose 0.4 percent to 177.8 last month. A decline in the MCAI indicates that lending standards are tightening, while an increase signals they are loosening.
“Credit availability loosened slightly in February, due to the net result of two countervailing movements,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “The supply of credit increased as more investors offered affordable low down payment mortgages and streamlined documentation loans guaranteed by the Federal Housing Administration and the Veterans Administration. However, the impact of that increase on the overall index was partially offset by the first downturn in the availability of jumbo credit in a year due to the consolidation of some jumbo programs.”