If you are planning on buying or refinancing a home it might be a good idea to act instead of waiting or maybe it is already too late. Concerns that the Federal Reserve might begin to curtail its $85 billion a month of Treasury and mortgage backed securities purchases have sent home mortgage rates soaring to their highest level in over a year.
The rate on a 30-year fixed mortgage reached 4.01 percent on Friday according to the Mortgage Bankers Association and averaged 3.90 percent for that week, the highest since May 2012. Weekly average rates gained 12 basis points last week, the largest rise in over a year, and 31 points over the month. The five year average for a 30-year fixed mortgage is 4.66 percent; the ten year average is 5.33 percent.
Credit markets have responded to comments from Fed Chairman Ben Bernanke and other Fed board members that the improving economic data could prompt the central bank to scale back its bond purchases at one of the "next few meetings' of the open market committee, the policy setting board of the bank.
April's existing and new home sales and durable goods orders were better than the previous month.The March Case-Shiller Home Price Index rose 10.9 percent in the top 20 U.S markets and 10.3 percent in the top ten cities, the biggest increases in since early 2006. The pace of price gains accelerated from 9.4 percent and 8.3 percent in February. Nationally prices rose 10.2 percent in March.
Mortgage applications were off 8.8 percent last week, following declines of 9.8 percent and 7.3 percent the prior weeks. It was the first three week decrease since February.
Mortgage refinancing fell 12.3 percent on the week in the steepest drop this year. Refinancings were 71 percent of new applications down from 74 percent the week before and the lowest level since December.
Chief Market Strategist