Federal Reserve Chair Janet Yellen’s speech last week had little effect on mortgage rates. The speech at a Jackson Hole, Wyoming, economics conference signaled that the central bank is moving closer to raising its benchmark rate. The Fed last raised the Federal Funds Rate in December.
Yellen’s speech caused home-loan rates to tick up initially but they retreated again to near yearly lows. Treasury yields saw their biggest daily decline in almost two months Monday before climbing back Tuesday. The movement of the 10-year Treasury bond is one of the best indicators whether mortgage rates will rise or fall.
Bankrate.com, which puts out a weekly mortgage rates trend index, found that nearly 90 percent of the experts it surveyed think rates will remain unchanged in the next week, moving no more than plus or minus two basis points (a basis point is 0.01 percentage point).
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average increased to 3.46 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.43 percent a week ago and 3.89 percent a year ago.
The 30-year fixed rate has stayed below 3.5 percent for more than two months. It has been stuck between a high of 3.48 percent and a low of 3.41 percent since late June.
The 15-year fixed-rate average edged up to 2.77 percent with an average 0.5 point. It was 2.74 percent a week ago and 3.09 percent a year ago.
The five-year adjustable rate average climbed to 2.83 percent with an average 0.4 point. It was 2.75 percent a week ago and 2.9 percent a year ago.
“The 10-year Treasury yield inched up in response to Fed Chair Janet L. Yellen’s speech last Friday then settled near last week’s average,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Mortgage rates have hovered between 3.41 and 3.48 percent for the past ten weeks.”
Meanwhile, mortgage applications were higher this week, according to the latest data from the Mortgage Bankers Association.
The market composite index – a measure of total loan application volume – rose 2.8 percent from the previous week. The refinance index increased 4 percent, while the purchase index ticked up 1 percent.
The refinance share of mortgage activity accounted for 63.5 percent of all applications.
“Refinance activity is strong because at these low rates there are borrowers who still stand to benefit, and as home prices appreciate some borrowers who were underwater or had little equity in their home are becoming eligible to refinance,” David H. Stevens, Mortgage Bankers Association president and chief executive, said. “However, the last time rates were at these levels, MBA’s index tracking mortgage refinance applications was almost twice as high. MBA’s economists project that by the end of the year the rate on the 30-year fixed rate mortgage will be 3.6 percent and that total refinancing activity will hit $835 billion. At the same time, a gradually strengthening economy continues to push purchase activity up over last year’s levels. By the end of the year, MBA projects $981 billion in mortgage originations for home purchases. “
