Rates, Purchase Apps Higher

Increasing for four straight weeks to its highest level since last August, the 30-year fixed rate mortgage average rose to 5.85% from 5.79% last week, according to Freddie Mac’s latest survey of 125 mortgage-lending thrifts, commercial banks and companies. It stands much higher than 5.41% a year ago.

“Even with rising mortgage rates over the last four weeks, 30-year fixed-rate mortgage rates remain a historical bargain,” commented Freddie’s deputy chief economist Amy Cutts in the announcement. “To date, contract rates for these mortgages have been below six percent for 31 weeks in a row, and we don’t expect these rates will rise very much above 6¼ percent by year end.“

Freddie’s March forecast has the 30-year averaging 6.0% in the next quarter as well as the third.

In line with Freddie’s predictions, 80% of Bankrate.com’s surveyed panel of 100 mortgage “experts” foresee a rise in rates over the next 40 to 45 days, while 20% predict a downturn.

The 15-year reportedly rose 5 basis points during the past seven days to 5.38%.

Also up by 5 BPS for the week, Freddie said the 5-year Treasury-indexed hybrid adjustable-rate mortgage reportedly averaged 5.22%.

The highest jump this week was in the 1-year Treasury-indexed ARM — up 10 BPS to 4.24%.

“Last Friday’s employment report reinforced the perception that the economy is on sure footing, leading bond markets to push interest rates higher again this week,” Cutts said. “Although inflation remains tame, the recent spike in oil prices does put inflationary pressures on the economy and was an additional factor causing higher interest rates.”

After rising to 4.52% on Wednesday — the highest level since July, the 10-year Treasury note traded early Friday with a yield of 4.51% and a price of 95.88. At the close a week earlier, it yielded 4.38%.

Rising rates trimmed application activity over the past 30 days, with the Market Composite Index edging down 1% from the prior week to 704.8, the Mortgage Bankers Association reported. A year ago, when rates were much lower, the measure of applications rested at 889.1.

While the Purchase Index reportedly increased 3% to 451.7 — its highest point this year, it was overshadowed by a 5% downturn in refinance requests.

Accordingly, the refinance share of applications fell to 43% from 45% previous week. Meanwhile, the ARM share remained at 31%, MBA reported.