Mortgage rates stayed flat last week, rising just slightly to 5.08% from 5.04% one week earlier, according to the Mortgage Bankers Association. So far, the big rise in rates that some had expected when the Federal Reserve ended its mortgage-backed securities purchase program last month hasn’t materialized.
In fact, the instability in Europe amid looming debt woes for Greece and Portugal on Tuesday sent investors looking for safer assets such as the 10-year Treasury, to which fixed-rate mortgages are closely tied. That has helped to keep rates down.
Still, intra-day rates have grown more volatile, says Dan Green, a Cincinnati mortgage broker. When the Fed was the main mortgage buyer, banks would send out rate sheets (effectively changing their pricing) around 10 times a week he says. Now, that’s happening about 20 times a week. “It’s been exceedingly challenging to pin down rates because they move so rapidly,” he says.
But rates haven’t bounced around much from day to day or week to week. HSH.com says that rates averaged 5.15% last week. They moved up to 5.17% on Monday, and then down to 5.16% on Tuesday.
Mortgage applications rose last week for new purchase mortgages, largely as the end of the home buyer tax credit spurs more lending activity, according to the MBA. While purchase activity was up 7.4% to its highest level in six months, refinance activity was down 8.8%. Government-backed loans from the Federal Housing Administration and other agencies accounted for nearly 49% of all purchase loan applications last week.
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