Fixed mortgage rates barely budged this week, but they appear poised to head higher.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average held steady at 4.55 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was the same as it was a week ago and up from a year ago when it was 4.05 percent.
The 15-year fixed-rate average slipped to 4.01 percent with an average 0.4 point. It was 4.03 percent a week ago and 3.29 percent a year ago. The five-year adjustable rate average climbed to 3.77 percent with an average 0.3 point. It was 3.69 percent a week ago and 3.14 percent a year ago.
“The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth and restrained inflation,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While this year’s higher rates – up 50 basis points from a year ago – have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.”
Global events involving Iran and North Korea came too late in the week to impact Freddie Mac’s survey. The government-backed mortgage-backer aggregates rates weekly from 125 lenders from across the country to come up with national average mortgage rates.
But those events coupled with recent economic reports make it likely home-loan rates will resume their ascent.
“Inflation and employment data over the past week were solid enough to keep the expected [Federal Reserve] interest rate hike in June on track,” said Aaron Terrazas, senior economist at Zillow. “A recent jump in oil prices should strengthen the near-term inflation outlook, and several speeches over the next week by a couple relatively new [Federal Open Market Committee] voices could add clarity to the likely path of interest rates beyond June.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found that nearly two-thirds of the experts it surveyed say rates will rise in the coming week. Michael Becker with Sierra Pacific Mortgage is one who expects rates to move higher.
“It looks like the trend for higher rates is back, and I expect this to continue in the coming week,” Becker said.
Meanwhile, mortgage applications were flat last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume – decreased 0.4 percent from a week earlier. The refinance index fell 1 percent, while the purchase index slipped 0.2 percent.
The refinance share of mortgage activity accounted for 36.3 percent of all applications.
“Application activity was little changed last week; both purchase and refinance applications declined slightly, even as rates took a pause in their upward trend,” said Joel Kan, an MBA economist. “The refinance index continued to slip and was at its lowest since 2008, as was the refinance share of applications.”
The MBA also released its mortgage credit availability index (MCAI) this week that showed credit availability was flat in April. The MCAI was unchanged at 177.9 last month. A decline in the MCAI indicates that lending standards are tightening, while an increase signals they are loosening.
“Credit availability in April was unchanged overall, but the components told different stories,” Kan said in a statement. “Government credit tightened slightly as investors continued to pull back on streamline refinance products, while conventional credit availability increased, driven mainly by an expansion in jumbo credit. The jumbo market remains competitive for lenders according to data from our Weekly Application Survey, as the spread between conforming 30 year fixed rate loans and jumbo 30 year fixed rate loans widened to 12 basis points over March and April, the widest this spread has been since early 2016.”
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