Applications for purchase loans for the week ending March 5 were up a seasonally adjusted 5.7 percent from the week before, the Mortgage Bankers Association said in releasing the results of its Weekly Mortgage Applications Survey.
Applications for refinancings were down 1.5 percent, as the average contract interest rate for 30-year fixed-rate mortgages increased to 5.01 percent from 4.95 percent, with points decreasing to 0.82 from 0.99 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.32 percent from 4.27 percent, with points decreasing to 0.88 from 1.36 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 6.8 percent from 6.77 percent, with points increasing to 0.3 from 0.29 (including the origination fee) for 80 percent LTV loans.
After reaching record lows in December, rates on 30-year fixed-rate loans and other mortgages are expected to rise when the Federal Reserve wraps up its ongoing purchases of $1.25 trillion in mortgage-backed securities (MBS) at the end of this month.
Mortgage market analysts expect the Federal Reserve will "linger" in the MBS market by allowing the mortgage-backed bonds it has purchased to mature, rather than selling them off right away, Reuters reported.
In a forecast published Feb. 23, MBA economists project rates on 30-year fixed-rate mortgages will rise to an average 5.7 percent during the second quarter and to 6 percent during the final three months of the year.
The forecast envisions rates continuing a steady upward climb, to an average of 6.2 percent in the fourth quarter of 2011 and 6.6 percent during the final three months of 2012.
The MBA forecasts that purchase loan originations will total $745 billion this year, rising to $822 billion in 2011 and $907 billion in 2012.
What’s your opinion? Leave your comments below or send a letter to the editor.