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Mortgage Roundup: What is the Deal With Rates, Applications?

ratesMortgage rates and applications had been on a continuous trend of low rates and high applications, but they have now changed course and are heading in an opposite direction.

Freddie Mac 's Primary Mortgage Market Survey found that average fixed mortgage rates increased this week, but are still well below 4 percent.

According to the report, the 30-year fixed-rate mortgage (FRM) averaged 3.66 percent with an average 0.6 point for the week ending April 28, 2016. Last week the 30-year rate averaged 3.59 percent, and a year ago at this time, the 30-year FRM averaged 3.68 percent.

Sean Becketti, Chief Economist, Freddie Mac said, "Treasury yields marched higher this week. As a result, the 30-year mortgage rate jumped 7 basis points to 3.66 percent. The Federal Reserve's decision to leave the Federal funds rate unchanged triggered a 9 basis point drop in the 10-year Treasury yield on Wednesday, however the drop occurred too late to impact this week's survey."

The Federal Housing Finance Agency (FHFA) monthly indices, released Thursday, showed that unlike Freddie Mac's weekly indicator, mortgage interest rates declined from February to March.

According to the FHFA data, the national average contract mortgage rate for the purchase of previously occupied homes by combined lenders index was 3.73 percent for loans closed in late March, down 15 basis points from 3.88 percent in February.  Overall, the average interest rate on all mortgage loans fell 13 basis points from 3.89 in February to 3.76 percent in March.

The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 3.95 percent, down 16 basis points from 4.11 in February, the report said. In addition, the average loan amount for all loans was $325,000 in March, up $8,300 from $316,700 in February.

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Mortgage applications followed Freddie Mac's report of a rise in interest rates this week with a 4.1 percent dropoff in mortgage applications from one week earlier, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending April 22, 2016.

Applications fell 3 percent on an unadjusted basis compared with the previous week. Meanwhile, refinance applications also decreased 5 percent from the previous week. Purchase applications fell 2 percent from last week and declined 1 percent on an unadjusted basis but remain 14 percent higher than a year ago.

Despite the blip in rates and application this week, homebuyers overcame one of the housing market's biggest obstacles—an imbalance in supply and demand—in March with a rebound in home sales.

The National Association of Realtors (NAR) reported Wednesday that existing-home sales rose 5.1 percent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February and 1.5 percent year-over-year.

 

"Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest–overcame depressed inventory levels and steady price growth to close on a home," said Lawrence Yun, NAR Chief Economist. "Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures."

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