Mortage Rates Follow Bond Yields Higher

Mortgage rates continue to rise but are still below five percent, according to the latest report from Freddie Mac's Primary Mortgage Market Survey. It shows both long and short-term rates rising in the past week.

Even though rates are moving up, they are still low by historical standards, and remain below year-ago levels.

"Mortgage rates followed bond yields a little higher this week amid positive data reports from The Conference Board that suggest the economy is strengthening," said Frank Nothaft, vice president and chief economist, Freddie Mac. "The index of leading indicators rose 1.0 percent in December, nearly twice that of the market consensus forecast and represented the sixth consecutive monthly increase, according to the Board. They also reported a stronger gain in consumer confidence for January, rising to an eight-month high.

In addition, the share of households who said jobs were plentiful rose to the highest level since May 2009."

Rate rundown

The 30-year fixed-rate mortgage (FRM) averaged 4.80 percent with an average 0.7 point for the week ending January 27, 2011, up from last week when it averaged 4.74 percent. Last year at this time, the 30-year FRM averaged 4.98 percent.

At the same time, the 15-year FRM this week averaged 4.09 percent with an average 0.7 point, up from last week when it averaged 4.05 percent. A year ago at this time, the 15-year FRM averaged 4.39 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.70 percent this week, with an average 0.7 point, up from last week when it averaged 3.69 percent. A year ago, the 5-year ARM averaged 4.25 percent.

The one-year Treasury-indexed ARM averaged 3.26 percent this week with an average 0.6 point, up from last week when it averaged 3.25 percent. At this time last year, the 1-year ARM averaged 4.29 percent.

Few takers

Though rates remain low, fewer consumers are getting new mortgages. In a report this week, the Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, decreased 12.9 percent on a seasonally adjusted basis from one week earlier. Despite that, Nothaft said he sees some hopeful signs for housing.

"Consumer demand in the housing market is also showing some positive gains," he said.  "Sales of existing homes rose in December to the strongest pace since May and sales of new homes  jumped to the highest since April. At their current sales rate, the expected time on the market fell from 9.5 to 8.l months for existing houses and fell from 8.4 to 6.9 months for new homes."