THE ECONOMY: Foreclosure Inventory Down a Year Ago, Up From Previous Month
Signs that an economic recovery remains on track sent mortgage rates rebounding from record lows this week, but the cost of home loans isn't expected to soar.
Purchase loan applications have picked up lately, to about the same level as seen at the same time a year ago.
Rates on 30-year fixed-rate mortgage averaged 3.92 percent with an average 0.8 point for the week ending March 15, Freddie Mac said in releasing the results of its Primary Mortgage Market Survey.
That's up from 3.88 percent last week but down from 4.76 percent a year ago. Rates on 30-year fixed-rate mortgages hit an all-time low in records dating to 1971 of 3.87 percent during the first three weeks of February.
For 15-year fixed-rate loans, rates averaged 3.16 percent with an average 0.8 point, up from 3.13 percent last week -- a low in records dating to 1991 -- but well below the 3.97 percent average seen during the same week a year ago.
Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.83 percent with an average 0.8 point, up from 2.81 percent last week but down from 3.57 percent a year ago. The five-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23, 2012.
For one-year Treasury-indexed ARMs, rates averaged 2.79 percent with an average 0.6 point, up from 2.73 percent last week but down from 3.17 percent a year ago. Rates on one-year
ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1, 2012.
Freddie Mac Chief Economist Frank Nothaft said February's employment report showed the U.S. adding 227,000 jobs, which sent bond yields up. Job growth over the last six months is the strongest since 2006.
In a Feb. 10 forecast, economists at Fannie Mae said they expect 30-year fixed-rate loans to hold steady at 4 percent this year before climbing gradually next year to an average of 4.2 percent by the fourth quarter of 2013.
Looking back a week, a separate survey by the Mortgage Bankers Associationshowed demand for purchase loans picked up a seasonally adjusted 4.4 percent from the week before during the week ending March 9. Purchase loan demand was down 0.4 percent from the same time a year ago.
"Purchase applications are now almost 12 percent above the level one month ago, even after adjusting for typical seasonal patterns," said the MBA's top economist, Michael Fratantoni, in a statement. "However, this level of purchase activity, adjusted or unadjusted, was essentially unchanged when compared to the same time last year."
Fratantoni characterized demand for purchase loans as "subdued," and "within the narrow range we have seen since the expiration of the homebuyer tax credit in 2010."