Rates up on debt fears

by MPA18 Oct 2013

Mortgage rates crept up this week as uncertainty over the recent budget impasse ground down market confidence, according to data released Thursday by Freddie Mac.

The average interest rate for a 30-year fixed-rate mortgage rose to 4.28% this week from last week’s 4.23%. A year ago at this time, the average rate for the 30-year FRM was 3.37%. The 15-year FRM also rose, up from last week’s 3.31% to 3.33% this week. Last year, the 15-year FRM averaged 2.66%.

Interest on adjustable-rate mortgages was also up this week. The 5-year Treasury-indexed hybrid ARM averaged 3.07% this week, up from last week’s 3.31%. Last year at this time, the 5-year ARM averaged 2.75%.

Average rates for the 1-year Treasury-indexed ARM edged down slightly this week to 2.63% from last week’s 2.64%. Last year, the 1-year ARM averaged 2.60%.

This week’s fluctuations were due in large part to market worries over the recent debt ceiling debate in Washington, according to Frank Nothaft, Freddie Mac vice president and chief economist.

“Recent confidence measures depict some of the effects of the government shutdown and uncertainty of the budget impasse,” Nothaft said. “For instance, consumer sentiment in October fell for the second straight month to the lowest reading since January, according to the University of Michigan. Similarly, October's homebuilder confidence fell to a four-month low. However, despite these downturns in confidence, mortgage applications rose for the second consecutive week as of October 11, elevated by increases in applications for refinancing.”

The refinance share of mortgage rose from last week’s 64% to 66% of total applications this week, according to data from the Mortgage Bankers Association.


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