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| Six consecutive weeks of rising rates have pushed the ratio of refinance requests to the lowest level in nearly two years.
The 30-year fixed-rate mortgage reached 6.59% — its highest level in nearly four years, according to Freddie Mac’s latest Primary Mortgage Market Survey. The 30-year is up 1 basis point from last week and 84 BPS higher than a year ago. “Mortgage rates have drifted upward for the sixth week running, which is consistent with Freddie Mac’s economic forecast,” Freddie Chief Economist Frank Nothaft said in a written statement. “We expect that the mortgages rates will continue to trend upward over the coming year, but that upward trend will be modest at best.” Freddie and Fannie Mae both predict the 30-year will average around 6.5% in the remaining half of the year, while the Mortgage Bankers Association sees it averaging 6.7%, according to the groups’ latest individual forecasts. Over 40 percent of the mortgage “expert” panelists surveyed by Bankrate.com this week believe rates will rise over the next 35 to 45 days, and an equal amount think they’ll remain relatively unchanged, while the rest predict a decrease. The average for the 15-year also nudged up 1 BPS within the past seven days to 6.22%, Freddie said. Unchanged from last week, 5-year Treasury-indexed hybrid adjustable-rate mortgages reportedly averaged 6.21%. The average 1-year Treasury-indexed ARM was the only mortgage rate that slipped — 1 BPS to 5.67% — this week. But no movement occurred with the 1-year T-bill itself, which was 4.98% as of Wednesday, the Federal Reserve reported. Meanwhile, the ARM share of mortgage activity was mostly unchanged at 28%, the mortgage bankers reported. The volume of 1003s rebounded from three consecutive weeks of declines, rising about 9 percent during the week ending April 28, MBA reported Wednesday. The upturn reflected an 11% increase in requests for purchase money loans and 5% higher demand for refinances. The refinance share, however, slipped from the prior week to 35% — the lowest share since June 25, 2004, the trade group said. And, “with gradually rising rates, refinance activity can be expected to shift,” Freddie’s Nothaft said. “Fewer families will be refinancing, but of those who are, a larger percentage will be drawing some equity out of their homes, many to pay off previously existing home equity loans and lines of credit as those loans become more expensive.“ Freddie recently reported that the share of refinances with cashout during the first quarter was at its highest level in 15 years. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. e-mail: [email protected]
