Mortgage Rates Rise For Fourth Straight Week

The cost of buying a house is going up. The price of the house isn't rising, the loan is.

The average rate for a 30-year fixed rate mortgage rose to 4.61 percent in the week ending December 9, according to Freddie Mac. The average rate was 4.46 percent the previous week.

The average 15-year fixed rate loan rose to 3.96 percent from 3.81 percent.

Demand for mortgages isn't pushing up rates. In fact, demand remains sluggish. Rather, it was a spike in the interest rate on mortgage-bond securities that propelled mortgage rates higher for a fourth straight week, analysts said.

The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of mortgage loan application volume, decreased 0.9 percent on a seasonally adjusted basis this week from one week earlier.  But on an unadjusted basis, the Index increased 22.8 percent compared with the previous week, which included the Thanksgiving Holiday.

The Refinance Index decreased 1.4 percent from the previous week. This is the fourth weekly decrease for the Refinance Index, which reached its lowest level since June 2010.

The seasonally adjusted Purchase Index increased 1.8 percent from one week earlier, suggesting that some potential homebuyers are coming off the sidelines as rates begin to rise a bit.

This is the third weekly increase for the Purchase Index which reached its highest level since early May 2010. The unadjusted Purchase Index increased 21.3 percent compared with the previous week and was 12.0 percent lower than the same week one year ago.
 
Mortgage rates are beginning to rise as evidence suggests more activity in the housing market. In its latest report on pending sales, the National Association of Realtors (NAR) reported a 10 percent jump in contracts signed on existing homes in October.

At the same time, Toll Brothers reported deposits on new home construction also rose 10 percent in the final two weeks of November.

Lawrence Yun, NAR's chief economist, says a return to more normal loan underwriting standards and removal of some underwriting fees for low risk borrowers could aid the housing recovery.