Signs that an economic recovery is picking up steam sent mortgage rates surging this week, with 30-year fixed-rate mortgages breaking through 5 percent to their highest level since April 2010, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.
A separate survey by the Mortgage Bankers Association suggests rates were already under pressure last week, denting demand for refinance and purchase mortgage applications.
According to Freddie Mac’s survey, rates on 30-year fixed-rate mortgages averaged 5.05 percent with an average 0.7 point for the week ending Feb. 10, up from 4.81 percent last week and 4.97 percent a year ago.
The 30-year fixed-rate mortgage hit a low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11.
Rates on 15-year fixed-rate mortgages averaged 4.29 percent with an average 0.7 point, up from 4.08 percent last week but down from 4.34 percent a year ago. The 15-year fixed-rate loan hit a low in records dating back to 1991 of 3.57 percent in November.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.92 percent with an average 0.6 point, up from 3.69 percent but down from 4.19 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.
Rates on 1-year Treasury-indexed ARMs averaged 3.35 percent with an average 0.6 point, up from 3.26 percent last week but down from 4.33 percent a year ago.
The MBA survey detected a surge in rates a week earlier, pegging the average contract interest rate for 30-year fixed-rate mortgages at 5.13 percent during the week ending Feb. 4, up from 4.81 percent the week before. Points decreased to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The rate increase helped push applications for refinancings down 7.7 percent from the week before, the MBA said, and purchase loan applications were also off a seasonally adjusted 1.4 percent. Demand for purchase loans was down 16.6 percent from a year ago.
"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Michael Fratantoni, MBA’s vice president of research and economics.
"We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."
In their most recent rate forecast, MBA economists said they expect rates on 30-year fixed-rate loans will climb to an average of 5.5 percent during the fourth quarter of 2011, and to an average of 6.1 percent during the final three months of 2012.
The MBA survey covers more than 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
Freddie Mac’s survey is based on lender quotes for first-lien prime conventional conforming mortgages with a loan-to-value of 80 percent. Rates and points are indicative of what a consumer could expect to be offered if they were to request a loan on that day.
About 25 lenders from each of Freddie Mac’s five regions are surveyed each week. The mix of lenders surveyed approximates the volume of mortgage loans that each lender type originates nationwide.