Rates Looking Up

The 30-year fixed-rate mortgage averaged 5.89%, according to Freddie Mac’s latest Primary Mortgage Market Survey, up seven basis points from last week and near 5.85% a year ago.

The average for the 15-year climbed nine BPS to 5.47% this week, Freddie said.

The 10-year Treasury note yielded 4.32% and was priced 98.44 at Thursday’s close, not much different from 4.31% and 98.47 a week ago.

The 5-year Treasury-indexed adjustable-rate mortgage reportedly averaged 5.40% — jumping 10 BPS within the past seven days.

The 1-year Treasury-indexed ARM followed suit — rising 10 PBS from last week to 4.57%. The index, the 1-year T-bill, stood at 3.90% as of Tuesday, up six BPS from a week earlier, according to the Federal Reserve.

“The stronger than expected employment report coupled with upward revisions in job growth for the previous two months renewed the market’s fear of inflation,” said Freddie chief economist Frank Nothaft in a written statement. “That’s because strong job growth can put upward pressure on wages — a key factor in inflation — that in turn, can drive long-term rates higher.”

Two-thirds of the 100 mortgage bankers, brokers and individuals surveyed by Bankrate.com this week expect rates to continue climbing over the next 35 to 45 days, while the rest equally split among those who think rates will drop and those who predict that rates will stay about the same.

Freddie’s latest forecast has the 30-year averaging 5.8% this quarter and reaching 6.0% by the end of the year.

Rising rates have slowed traffic at mortgage shops for three weeks in a row mainly due to refinance request fallout. The Market Composite Index, which measures loan application volume, eased about 1% from the previous week to 745.0, according to MBAs latest applications survey, as a 3% decline in refinance activity overshadowed a 1% increase in purchases.

The refinance share of mortgage activity edged down from the prior week to below 41%, while the ARM share nudged up to 30%, MBA said.