Fixed mortgage rates halt their downward march

Fixed mortgage rates’ downward march came to a halt this week.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average held steady at 3.78 percent with an average 0.5 point, same as it was last week. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.5 percent a year ago.

The 15-year fixed-rate average also didn’t move, remaining at 3.08 percent with an average 0.5 point. It was 2.77 percent a year ago. The five-year adjustable rate average slipped to 3.13 percent with an average 0.4 point. It was 3.15 percent a week ago and 2.82 percent a year ago.

The lack of movement by fixed mortgage rates may be the pause before they begin to ascend once again. Long-term bond yields rose sharply this week, after slumping to their lowest levels since the presidential election. Since falling to 2.05 percent on Sept. 7, the yield on the 10-year Treasury surged to 2.20 percent Wednesday.

The yield on the 10-year Treasury tends to be one of the best indicators of where home loan rates are headed. When yields go up, mortgage rates tend to follow.

Bankrate.com, which puts out a weekly mortgage rate trend index, found that more than two-thirds of the experts it surveyed say rates will climb in the coming week. Shashank Shekhar, chief executive of Arcus Lending, is one who believes rates will move higher.

“After touching the lowest levels of the year last week, mortgage rates have since trended up,” Shekhar said. “North Korea fears have been abated and damages by Irma and Harvey have been digested. Unless we get a black swan moment, something that shocks the stock market, I am not too bullish on mortgage-backed securities. This would mean a slightly higher mortgage rate in the coming week for the borrowers.”

Meanwhile, despite two natural disasters that struck major population centers, mortgage applications picked up last week, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – increased 9.9 percent. The refinance index jumped 9 percent, while the purchase index grew 11 percent.

The refinance share of mortgage activity accounted for 51 percent of all applications.

“To illustrate the impact of the two major hurricanes, over the past two weeks, mortgage applications for the state of Texas ran about 25 percent lower than the state’s weekly average for the year to date, reflecting the impact of Hurricane Harvey,” said Joel Kan, an MBA economist. “Additionally, in the most recent week we saw mortgage applications in Florida fall 48 percent lower than its 2017 weekly average, as many residents evacuated in anticipation of Hurricane Irma. In comparison, the level of applications for the nation last week was only 12 percent lower than its 2017 average.”

The MBA also released its mortgage credit availability index (MCAI) this week that showed credit was slightly more available in August. The MCAI rose 0.7 percent to 180.2 last month. A decline in the MCAI indicates that lending standards are tightening, while an increase signals they are loosening.

“Mortgage credit availability increased slightly in August, driven by the expansion of credit among conforming and agency jumbo programs,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “Following the same pattern as last month, agency eligible adjustable rate mortgage loan programs continued to be updated in August to allow for higher loan-to-value ratios, effectively increasing the availability of credit.”