Mortgage Rates Continue to Move Higher, Raising New Concerns About Affordability

Lloyd Doyle
October 14, 2018

The cost for would-be homeowners to finance the purchase of a home or existing homeowners to refinance their current home continues to get more expensive as mortgage rates have surpassed the 5% interest threshold, causing mortgage application volume to fall last week by 1.7%, according to the Mortgage Bankers Association. These numbers represent data gathered in a survey conducted by MBA accounting for over 75 percent of all USA retail residential mortgage applications.

The Refinance Index shows a drop of 3 percent compared with the preceding week, while the Purchase Index dropped 1 percent over the same period. A year ago at this time, the 30-year FRM averaged 3.91 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2010, 4.44 percent, from 4.39 percent.

15-year FRM this week averaged 4.29 percent with an average 0.5 point, up from last week when it averaged 4.15 percent. And the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.07 percent, up from last week when it averaged 4.01 percent.

"In this week's survey, the 30-year fixed-rate mortgage jumped 19 basis points to 4.90 percent", said Sam Khater, Freddie Mac's Chief Economist.

On Tuesday, benchmark 10-year Treasury yield US10YT=RR rose to 3.261 percent, the highest since May 2011, as investors pared their bond holdings on worries about rising inflation and a faster pace of interest rate hikes from the Federal Reserve. 5/1 ARMs increased to their highest levels since the series was initiated in 2011, up from 4.24 to 4.29 percent.

Other reports by Iphone Fresh

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