Mortgage rates are now on their third week slump of the new year as lenders are hit with the economic news.
There have been indications that inflation is creeping up. The consumer price index grew by 2.1 percent; this is the quickest rate in five years. The Federal Reserve also released its “beige book,” which indicates that the economy is growing at a modest rate,
Federal Reserve Chair Janet Yellen said Wednesday she expects interest rates to rise “a few times per year” through 2019.
The 10-year Treasury is a more reliable source of what the mortgage rates will be doing in the near future. The yield 10-year treasury fell to 2.33 percent, its lowest level since late November. The very next day, the yield increased to 2.42 percent, its biggest one-day gain since December 9.
“After trending down for most of the week, the 10-year Treasury yield rose following the release of the CPI report,” Sean Becketti, Freddie Mac chief economist, said in a statement. “In contrast, the 30-year mortgage rate fell three basis points to 4.09 percent, the third straight week of declines.”
The 30-year fixed rate was down to 4.09 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) This program has fallen 23 basis points just in the past three weeks.
The 15-year fixed rate dropped to 3.34 percent with an average 0.5 point. The five-year adjustable rate fell to 3.21 percent with an average 0.4 point.
Mortgage applications stayed flat last week, according to data from the Mortgage Bankers Association. The refinance index rose 7 percent, meanwhile, the purchase index dropped by 5 percent.
Refinance transactions accounted for 53 percent of all mortgage transactions.
“Mortgage activity was lackluster last week, with total volume up less than 1 percent on a seasonally adjusted basis,” MBA’s chief economist, Michael Fratantoni, said. “Purchase activity fell below last year’s level by 1 percent, even as mortgage rates hit their lowest point in a month. The boost in refi volume was led by a jump in FHA refinance activity. Total refinance volume, up 7 percent for the week, is still down sharply from the end of last year, remaining 13 percent below the level from four weeks ago.”
According to data put out by Bankrate.com, nearly half of all experts surveyed said rates will remain relatively stable in the coming weeks, while a third said they will fall.