Adjustable-rate mortgages make a comeback as rate rises loom

Lucy Hill
March 12, 2017

There's one other explanation for consumers to pile in to adjustable-rate mortgages, and it sticks out like a sore thumb in the middle of the chart based on MBA data.

USA mortgage application activity increased to its highest level in about 2-1/2 months even as 30-year home borrowing costs rose in the latest week, Mortgage Bankers Association data released on Wednesday showed.

Freddie Mac Chief Economist Sean Becketti said that 10-year Treasury yields rose by 10 basis points.

The 30-year fixed-rate mortgage (FRM) averaged 4.21 percent, up from last week when it averaged 4.10 percent, while the 15-year FRM this week averaged 3.42 percent, up from last week when it averaged 3.32 percent. However, in early Friday trading, the bond market was calm, with yields holding mostly steady. It was 4.1 percent a week ago and 3.68 percent a year ago.

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Bankrate.com's weekly mortgage rate index that tracks borrowing trends reports that 90 percent of experts surveyed expect rates will climb even higher in the coming days.

The average for a 15-year refi is now running at 3.30 percent, up 9 basis points since the same time last week. "The 235,000 net new job additions in February and 2.3 million over the past year will support home buying even in the face of higher mortgage rates". 7 year Adjustable Rate Mortgages are being offered for 3.875% now yielding an April of 4.045% to start. Shorter term, popular 15 year refi loan deals stand at 2.75% at the bank and April of 3.239% today. A year ago, the 5-year ARM averaged 2.92 percent.

The average rate for a 10-year fixed-refinance rate is 3.18 percent, up 6 basis points from a week ago.

Other reports by TheDailyFarc

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