Mortgage rates retreat as applications rise

Money houseRates on the most popular types of mortgages slipped slightly, according to’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by two basis points (0.02 percent) to 3.53 percent. Conforming 5/1 Hybrid ARM rates decreased by two basis points as well, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.65 percent.

“There has been little market-moving economic news to push mortgage rates in one direction or the other of late,” said Keith Gumbinger, vice president of “The fight in Washington over the debt ceiling and spending cuts is getting more fully underway and markets are watching the theatre, but there is no grave concern about any financial impacts just yet.”

“Last week, the Consumer Finance Protection Bureau announced new regulations to govern the mortgage process, but there were few surprises contained in the final definition of what constitutes a “qualified mortgage.” Since the new rules won’t go into effect for a full year, there’s been no immediate impact on the market. As such, it’s mortgage business as usual, for the most part.”

Mortgage applications still rising

Despite firming interest rates in recent weeks, mortgage application volume was once again on the rise, according to the Mortgage Bankers Association. The trade group reported Wednesday that overall application volume was up 15.2 percent for the week ending Jan. 11. For the week ending Jan. 4, overall application volume was up 11.7 percent.

The MBA’s purchase index was up 13 percent for the week, its highest level since April 2011, and the refinance index was up substantially as well, increasing 15 percent from the week prior. Refinances continue to dominate overall applications, holding steady at 82 percent of total activity. ARMs represent 3 percent of application activity.

Last week, we said we were keeping our eye on two specific items when it came to mortgage application volume:

1. If application volume continues to trend upward as we move away from the holidays.

2. If applications hold up despite some increases to rates we’ve already seen and may continue to see.

So far, so good. Two weeks out of the holiday season and despite recent rate increases, applications are holding strong.

The next item we’re keeping our eye on is this:

How will the balance between purchase and refinance volume shift as we move closer to the spring homebuying season?

HSH Associates Financial News Blog

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