Fixed-rate mortgages rose slightly this week, with further increases predicted in the short-term. The uptick followed a two-week downturn in which key rates hit their lowest levels since June.
Mortgage buyer Freddie Mac’s latest survey showed that the average rate on a 30-year mortgage increased 0.06 percentage point week-over-week. The 30-year average is now trending at 4.16 percent after previously dropping to 4.1 percent, which was the lowest level in four months. A year ago, the average rate on a 30-year fixed mortgage was 3.4 percent.
The average rate on a 15-year fixed loan rose to 3.27 percent, an increase of 0.07 percentage point week-over-week and 0.58 percentage point year-over-year. The 15-year average has not trended below the 3 percent threshold since May of this year.
Fixed mortgage rates are predicted to rise significantly come January, when the federal government is expected to curb its bond buy-back program. Some predict the 30-year fixed-rate average will rise to as much as 4.6 percent in Q1 of 2014 and hit the 5 percent threshold by Q3.
Loans previously dipped in October following the conclusion of the federal government shutdown. Beginning in May, averages on fixed-rate mortgage loans had climbed more than a percentage point; however, a week ago both the 30-year and 15-year fixed-rate loans hit their lowest levels since June 20.
“Fixed mortgage rates rebounded slightly this week on more positive economic data releases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “Production in the manufacturing industry expanded for the fifth month in a row in October to the strongest pace since April 2011. Similarly, the non-manufacturing sector grew for the second consecutive month in October and beat the market consensus forecast of a decline. These increases were widespread across the nation, from Chicago to Milwaukee to New York.”
Rates on hybrid adjustable mortgage loans were mixed. The five-year ARM remained at 2.96 percent week-over-week. A year ago, it averaged 2.73 percent. The average rate on a one-year ARM fell slightly, dropping to 2.61 percent from 2.64 percent.
Looking ahead to next week, mortgage rates are expected to trend upwards. In the latest Mortgage Rate Trend Indexby Bankrate.com, half of the analysts and loan experts polled believe that rates will increase over the next week. However, at least one loan officer believes the uptick is temporary. “Short-term technical forces should drive Treasury yields and mortgage rates slightly higher. This will last no more than two weeks,” opined Dick Lepre of RPM Mortgage.
(c)2013 The Orange County Register (Santa Ana, Calif.)