Mortgage Rates Hit 10 Month High

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 4th, 2011.
The Refinance Index decreased 7.7 percent from the previous week. The four week moving average is down 1.5 percent. The refinance share of mortgage activity decreased to 66.6 percent of total applications from 69.3 percent the previous week. This is the lowest refinance share observed in the survey since the week ending May 14, 2010.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13percent from 4.81 percent, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This means your no point loans are carrying even higher rates. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009.

"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Michael Fratantoni, MBA's Vice President of Research and Economics. "We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."

We all new that rates could not stay in the 4% range for ever. The question is are they gone for good? Bottom line...Rates in the 5% range, on a historical basis, are still fantastic and should not stop you from trying to buy a home if that is your goal. Remember, mortgage interest is also a tax dedcutible expense.

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