Mortgage rates followed bond yields higher this week, as signs of economic growth made bonds less attractive to investors.
Fixed-rate mortgages were up for the third week in a row for the week ending Dec. 2, mortgage giant Freddie Mac said, with the 30-year fixed-rate mortgage averaging 4.46 percent with an average 0.8 point. That’s up from 4.4 percent last week but still well below the 4.71 percent registered at the same time a year ago.
Rates on 15-year fixed-rate loans averaged 3.81 percent with an average 0.7 point, up from last 3.77 percent a week ago but down from 4.27 percent a year ago.
Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.49 percent with an average 0.6 point, up from 3.45 percent last week but down from 4.19 percent a year ago.
The 1-year Treasury-indexed ARM averaged 3.25 percent with an average 0.6 point, up from 3.23 percent last week but down from 4.25 percent a year ago.
Freddie Mac’s weekly Primary Mortgage Market Survey tracks prime conventional conforming mortgages with 20 percent down payments. Borrowers with damaged credit or those making smaller down payments usually pay higher rates.
Fixed-rate mortgages hit all time lows in Freddie Mac’s survey during the week ending Nov. 11, when the 30-year fixed-rate mortgage bottomed out at 4.17 percent and 15-year fixed-rate loans hit a record low of 3.57 percent.
Many analysts believe that if economic growth picks up, mortgage rates have only one way to go: up. In an Oct. 26 forecast, the Mortgage Bankers Association predicted rates on 30-year fixed-rate mortgages will rise to an average of 5.1 percent by the fourth quarter of 2011, and climb to 5.7 percent in the second half of 2012.
While rising mortgage rates have curtailed demand for refinancings, last week demand for purchase loans was at its highest level since May, the Mortgage Bankers Association said in a separate survey released this week.
Demand for purchase loans was up a seasonally adjusted 1.1 percent for the week ending Nov. 26, the MBA said, noting that results were also adjusted for the Thanksgiving holiday. Looking back a year, purchase loan applications were up 2.7 percent.
Demand for refinancings fell 21.6 percent from the previous week — the third consecutive decrease in the refinance index. Requests to refinance accounted for 74.9 percent of all loan applications, down from 78.6 percent the week before.