Mortgage Rates Continue to Climb

Mortgage rates are continuing their gradual climb upwards after reaching record lows. The 30-year fixed mortgage rate rose to 4.8 percent from 4.74 percent the previous week, Freddie Mac reports. The average on 15-year mortgage rates also rose slightly from 4.05 percent to 4.09 percent for the week.

In November, 30-year loans had reached a 40-year low at 4.17 percent and the 15-year mortgage rate was at 3.57 percent.

The average on the five-year adjustable-rate mortgages this week increased to 3.7 percent from 3.69 percent the previous week.

Meanwhile, the Mortgage Bankers Association says it expects mortgage lending to drop considerably in 2011, due to high unemployment, borrowers’ diminished credit coming out of the recession, and more lenders not willing to take on a high risk.

MBA says it expects new loans this year to decrease by 36 percent to its lowest level in more than a decade, falling to $966 billion in 2011 from $1.5 trillion this year.

Earlier in the week, MBA reported a drop in mortgage applications to the slowest refinancing activity in more than a year. Mortgage applications dropped 12.9 percent in the week ended Jan. 21, according to MBA’s seasonally adjusted index.

The index dropped 15.3 percent, which is the lowest level since January 2010. Refinancing activity has continued to decline since October from rising interest rates and tighter underwriting standards

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Steve Harney Talks about Shadow Inventory

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Weekly Information 01/10

Mortgage interest rates were mostly flat on the week despite generally stronger than expected economic data. Economic reports better than expected included November Construction Spending, November Factory Orders, and the December ISM Services Sector Index. The ISM Services Sector Index increased to 57.1, the highest level since early 2006. Employment data was mixed. The December ADP Private Jobs Report showed job gains of 297k on expectations of 100k job gains. However, today’s employment report for December from the Bureau of Labor Statistics showed gains in non-farm payrolls of 103k on expectations of a gain of 160k non-farm payrolls. Private non-farm jobs increased by 113k on expectations of an increase of 180k jobs