(Reuters) - Applications for U.S. home mortgages fell for a second week and hit a 13-year low as mortgage rates rose due to a bond market sell-off following the Federal Reserve's decision to pare its bond purchase stimulus in January, an industry group said on Tuesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 6.3 percent to the lowest level since December 2000.
Mortgage applications have fallen sharply since this summer on a jump in home finance costs as benchmark Treasuries yields eventually rose to a two-year high.
Last Wednesday, Fed policy-makers opted to make their tapering move, which will begin in January with a $10 billion monthly reduction evenly split between Treasuries and mortgage-backed securities to $75 billion.
"Following the Federal Reserve's taper announcement, mortgage application volume dropped again last week, with rates increasing and refinance application volume falling to its lowest level since November 2008," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.
The rate on fixed 30-year mortgages averaged 4.64 percent last week, up 2 basis points from the prior week. It fell short of the two-plus year high of 4.80 percent set in September.
The MBA's seasonally adjusted index of refinancing applications fell 7.7 percent.
The gauge of loan requests for home purchases, a leading indicator of home sales, fell 3.5 percent to its lowest level since February 2012.
The refinance share of total mortgage activity slipped to 65 percent from 66 percent the previous week, while adjustable-rate mortgages rose 8.3 percent last week to the biggest share since July 2008.
The MBA typically reports its weekly application data on Wednesday, but released the data a day early due to the Christmas holiday. It said it will suspend release of the data next week. It will resume the release of the data on January 8 with results of the two prior weeks.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
It's all about the Fed.
You may have heard this song before, but after months of speculation, we could find out Wednesday afternoon when the Federal Reserve will begin to cut back on its massive bond-buying program.
Now it's important to understand that even if the Fed does begin the long-awaited taper, it won't end the stimulus program. It has been pumping 85 billion dollars a month into the economy. When the taper does begin, it will "only" buy $70 billion or $75 billion a month.
Despite the Fed's pledge to keep interest rates low, mortgage rates are likely to rise. Fannie Mae and Freddie Mac will soon begin to charge more to borrowers who don't make a large down payment and have a high credit score. The effective mortgage rate on new loans could increase by as much as half a point.
An important court win for Philip Morris. The New York Court of Appeals said long-term smokers who don't show signs of disease can't sue the Altria (MO) unit to set up a program to monitor their health. The court upheld an earlier decision that there was no legal basis for such a claim.
On Wall Street, the Dow Jones industrial average (^DJI), edged 9 points lower Tuesday, the Nasdaq composite (^IXIC) fell 6 and the Standard & Poor's 500 index (^GPSC) lost 5 points.
Another well-known company makes its Wall Street debut today. Movie theater owner AMC Entertainment priced its stock at $18 a share, which is at the low end of expectations. And there's an interesting twist to this initial public offering. The company offered shares at the IPO price to its most loyal movie customers. AMC is owned by a Chinese conglomerate.
Finally, the number of students enrolling in law school continues to decline. The American Bar Association says there were 11 percent fewer first year students this year, and the total number is the lowest it's been since 1977. One reason: the high level of student debt for many recent college grads.
CoreLogic Reports 791,000 More Residential Properties Return To Positive Equity In Third Quarter Of 2013
Mortgage rates jumped this week on stronger-than-expected economic reports, according to Freddie Mac's weekly survey.
The 30-year, fixed-rate loan, the most popular product for homebuyers, rose to 4.46% from 4.29% last week. The average rate on a 15-year, fixed-rate mortgage, typically used for refinancing higher interest mortgages, also jumped 0.17 percentage point to 3.47%.
This week's rate approached a high for the year. Rates on the 30-year have ranged from a low of 3.34% in the first week of January to a high of 4.58% in August.
Frank Nothaft, Freddie's chief economist, cited job creation as a prime reason for the rate spike.
"Private companies added 215,000 new jobs in November according to the ADP employment report, well above the consensus," he said. "In addition, revisions added 54,000 jobs in the prior month."
Read more: http://money.cnn.com/2013/12/05/real_estate/mortgage-rate-rise/
Average interest rates on fixed-rate mortgages jumped higher this week according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS) for the week ending December 5th, 2013.
Fixed Rate Mortgages:
Interest rates on fixed rate mortgages pushed higher this week with the 30-year fixed rate mortgage increasing by seventeen basis points to an average of 4.46 percent with an average of 0.5 points. Last week the average rate increased by seven basis points. A year ago, the 30-year fixed rate mortgage averaged 3.34 percent.
Average 30-year fixed rates were generally the lowest in the Southeastern portion of the United States where mortgage rates averaged 4.43 percent while the highest rates were reported in the North Central area of the country where interest rates averaged 4.50 percent.
The average rate for a 15-year fixed mortgage was 3.47 percent this week with an average of 0.4 points, up from an average of 3.30 percent last week. At this time last year, the 15-year fixed rate mortgage averaged 2.67 percent.
Adjustable Rate Mortgages:
Interest rates for adjustable-rate mortgages were mixed this week with the 5-year Treasury-indexed hybrid ARM averaging 2.99 percent, with an average of 0.4 points, up from an average of 2.94 percent last week. The 5-year adjustable rate mortgage averaged 2.69 percent a year earlier.
The 1-year Treasury-indexed adjustable rate mortgage averaged 2.59 percent with an average of 0.4 points, down slightly from an average of 2.60 percent last week. A year ago, the 1-year adjustable rate mortgage averaged 2.55 percent.
The option of refinancing your mortgage offers advantages.
Once you have a mortgage you’re not locked into it until your home is completely paid off. You always have the option of refinancing the loan and in some cases it might be in your best interests because of the perks involved. It’s definitely something to keep in mind and if you’ve not even thought about it yet we can look at some of the reasons why you should. If you think your life will improve for the better you should go and speak to someone about it after reading this.
Shorten the term of your loan
When most people take out a mortgage they are young and they aren’t making a lot of money. Fast forward a few years and they’re making a little more plus the interest rates could have dropped a considerable amount. If you enter your details into a mortgage calculator you might find because of the lower interest rates you could easily reduce the term of your mortgage and it wouldn’t cost you much more per month. It’s definitely worth considering if you can afford it because life is better when your mortgage has been paid off.
Lower your interest rate
Sometimes it’s not nice looking at the money coming out of your bank account every month because you know deep down you should be paying a lot less. Always be open to the possibility of refinancing your mortgage if you can get a lower interest rate because over the life of your mortgage it could save you tens of thousands of dollars. It’s better in your pocket than the bank’s especially when you realize you can save all that money by simply filling out a few forms.
Reduce your monthly payment
You know you’re in trouble when the ground opens up and starts swallowing you. That is how some people feel when they can’t afford their mortgage payments no matter what they do. Maybe your interest rate shot up or you had your hours cut back at work, but no matter the reason it might be a good idea to refinance your mortgage in order to reduce your monthly repayments. When less money is coming out of your account each month it means you have more of a safety net.
Switch to a different loan
If you signed up to the wrong type mortgage in the first place it might be a good idea to find out how to claw yourself out of the hole you find yourself in. Some people decide to take out an adjustable-rate mortgage because fixed-rate ones didn’t look so good at the time, but as soon as things change for the worst it might be time to refinance your mortgage to jump onto something else. Fixed-rate mortgages are a lot better when the interest rate is low because you’ll find it much easier to juggle your finances.
In order to treat yourself
The last reason you might want to refinance your mortgage is because you want to treat yourself to an expensive gift. If your home is getting old it might need major renovations carried out and refinancing could be the only way you can get that sort of money together. You could take some money to start your own business or you could put a deposit down on a rental home. If you decide to take any money out of your home it must be for a good reason or it’s not worth it.What are you thinking?
Do you think now is a good time to look more deeply at your refinancing options? If you don’t do something about it now you could be losing money each and every month. It’s not actually too hard to sort out and you’ll not lose your hair because of the stress involved, so just do something before you forget.
Real-estate website Zillow Inc. Z -2.93% said its real-time rate on 30-year fixed-rate mortgages increased in the latest week, rising for a second straight week.
The 30-year fixed-mortgage rate on Zillow's Mortgage Marketplace, which tracks mortgages on the company's website, was up at 4.25% from 4.14% a week earlier.
Although Federal Reserve Chairman Ben Bernanke has said the central bank is committed to keeping short-term interest rates low for an extended period, Zillow expects upward pressure and volatility in mortgage rates, according to Svenja Gudell, economic research director at Zillow.
"This week will bring more movement as a lot of important economic data is set to be released," Ms. Gudell said.
Zillow said the rate for a 15-year fixed home loan was 3.22% compared with 3.13% last week. The rate for a 5-1 adjustable-rate mortgage was 2.72%, unchanged from the previous week. A 5-1 ARM has an initial rate that applies for the first five years of the loan and then adjusts annually.
Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers through the company's website.