Bobby Darvish - Mortgage rates wander upward for third week in a row

Mortgage rates wander upward for third week in a row

 

(Freddie Mac)

Mortgage rates wandered upward for third week in a row prior to the Federal Reserve’s announcement Wednesday that it was leaving its benchmark interest rate unchanged and lowering its economic forecasts.
That news came too late in the week to be factored into the Federal Home Loan Mortgage Corp.’s survey. The government-backed mortgage-backer aggregates current home loan rates weekly from 125 lenders from across the country to come up with a national mortgage average.
With the Fed indicating that it expects to raise rates only two or three times this year, home loan rates are likely to remain low for the foreseeable future. That’s good news for the spring home-buying season.

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According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 3.73 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.68 percent a week ago and 3.78 percent a year ago. The 30-year fixed rate has remained below 4 percent since late December.
The 15-year fixed-rate average rose to 2.99 percent with an average 0.4 point. It was 2.96 percent a week ago and 3.06 percent a year ago. The 15-year fixed rate has stayed under 3 percent since early February.
The five-year adjustable rate average edged up to 2.93 percent with an average 0.5 point. It was 2.92 percent a week ago and 2.97 percent a year ago.
“Treasury yields increased heading into this week’s FOMC meeting, partially in response to modestly higher inflation readings,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“[T]he Fed confirmed what the market had already concluded and made no change to the Federal funds target. The Fed went further and acknowledged that economic signals have been mixed and that the pace of monetary tightening may be slower than had been assumed at the end of 2015.”

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Meanwhile, higher rates pushed mortgage applications down, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume – fell 3.3 percent from the previous week. The refinance index dropped 6 percent, while the purchase index inched up 0.3 percent.
The refinance share of mortgage activity accounted for 55 percent of all applications.

Bobby Darvish of Platinum Lending Solutions

Mortgage Rates Boost on the Back of Improved Economic Environment

Mortgage applications, refinancing and purchase declined over the week as mortgage rates increased

Mar 6, 2016 at 5:21 am EST

By Abdul Wasay on Mar 6, 2016 at 5:21 am EST

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For the week that ended on March 3, Freddie Mac reported the benchmark 30-year fixed-rate mortgage rate increased to 3.64%. For the week that ended on February 25, the mortgage rate has been at 3.62%. This shows the upward trend of 0.55% over the week. As per the Washington Post, improved economic data drove the benchmark mortgage rates up. According to the data released on Thursday by the Federal Home Loan Mortgage Corp. (OTCMKTS:FMCC), 15-year fixed-rate mortgage rate was at 2.94%, and five-year adjustable rate increased to 2.84%. The week that ended on February 25 had 15-year rate at 2.93% and five-year adjustable rate at 2.79%. This indicates improvement of 0.34% in 15-year fixed rate mortgage rate while five-year adjustable rate increased 1.8% over the week.

Freddie Mac chief economist, Sean Becketti stated: “The market turbulence that kicked off the year subsided at the end of February, providing at least a temporary break in the flight to quality.” He added that the treasury yields have approached the highest point in a month, which drove the growth in 30-year fixed-rate mortgage rate to 3.64%.

However, recently Federal Reserve officials have hinted unchanged interest rates at 0.5%. Federal Reserve’s Vice Chairman Stanley Fischer hinted that there is no rush to hike rates in short-term. He emphasized that if more-than-full employment sustains, then only inflation rate will reach the target of 2%. Federal Reserve Governor Jerome Powell stressed that the central bank’s decision for rate hike is data-driven. Federal Fund future prices projection outlines that there is 94.2% probability of unchanged rates and 5.8% probability of quarter-point rate hike to 0.75%.
Consumer spending improved in January, as the core PCE index improved 1.7% year-over-year (YoY). According to the US Department of Commerce, seasonally adjusted total construction spending increased 10.4% YoY in January. As per the February Manufacturing ISM Report on Business, the PMI improved and stood at 49.5% in February, up 1.3% from January. The PMI figure below 50% means the manufacturing economy is contracting. Consequently, the manufacturing index improved while the sector remained in contraction phase.

Since the consumer spending, construction spending and manufacturing sector improved, so the investors sentiments improved as well. In addition, the 10-year treasury yield improved 5.2% on March 1. In March, the 10-year treasury yield gained nearly 0.4%, from March 1 till March 3. Owing to enhanced investor sentiments and improved treasury yield, mortgage rate also followed the trend and moved up. On the contrary, mortgage applications were down as the market composite index fell 4.8% over the week. The refinance index fell 7%, and purchase index fell 1% over the week. Improved mortgage rates hampered the mortgage related activity (refinancing, applications and purchase) which were up last week. If Federal Reserve decides to keep interest rate at the current level, then mortgage-related activities are likely to increase.