Interest rates deteriorated for the third week in a row, dampening demand for mortgages refinances and leaving fewer consumers shopping for a loan. But behind the mortgage market deterioration is an improving economy.
With a weekly rise of 0.06 percent, the average 30-year fixed-rate mortgage was 4.46 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Dec. 2. The 30-year, however, was better than 4.71 percent a year earlier.
An improving economy was blamed for the higher rates by Freddie’s chief economist, Frank Nothaft.
An analysis of Treasury market activity suggests that mortgage rates won’t be much different in this week’s reports.
In a forecast issued Friday, HSH Associates said that continued strength in the economy could push interest rates higher, though there is little likelihood of a spike. Over the next nine weeks, HSH sees the 30-year hovering between 4.65 percent and 4.95 percent.
Panelists surveyed by Bankrate.com for the week Dec. 2 to Dec. 8 concurred with HSH, with 64 percent predicting an increase in mortgage rates over the next week or so. Another 22 percent forecasted no change and 14 percent expected a decline.
Rates on jumbo mortgages, those more than $417,000, were around 0.82 percent higher than conforming mortgages this past week in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday. It was an improvement from 0.84 percent last week.
Compared to a week prior, the 15-year fixed-rate mortgage was marginally higher at 3.81 percent, according to Freddie’s report.
Freddie reported that the one-year adjustable-rate mortgage averaged 3.25 percent, higher than 3.23 percent seven days earlier and 1 percent below the same week last year.
The number of consumers who are shopping for a mortgage loan tumbled, with the Mortgage Market Index falling to 188 from the previous week’s level of 250. It was the third consecutive week mortgage rates were lower.
As rates have been rising, the share of borrowers who are refinancing fell to exactly a half from 54 percent in the previous week’s Mortech-Mortgage Daily report.
The average U.S. mortgage amount declined to $204,978 in the Mortgage Market Index report from $208,274 the previous report. The state with the highest average was Hawaii, at $273,512. North Dakota’s $93,686 was the lowest average loan amount.
