Mortgage rates rise for the first time in 2016, but are still in refi territory

Interest rates on mortgages increased this week as oil prices edged up and the U.S. manufacturing sector posted gains.

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Treasury notes reverse course

The favorable economic news prompted investors to move away from government bonds this week, causing yields to rebound after nose-diving last week. The 10-year Treasury yield rose from a 1-year low of 1.63% to an intraday high of 1.83% Wednesday afternoon. Mortgage rates tend to track long-term government bond yields.

Rates are in a volatile state right now, says Brian Koss, executive vice president of Mortgage Network in Danvers, Massachusetts.

"Even though they're still down from some of the recent highs, we definitely touched a temporary bottom and came back to reality from that free fall that we all were on," he says.

This week's rates

  • The benchmark 30-year fixed-rate rose to 3.85% from 3.78%, according to Bankrate's Feb. 17 survey of large lenders. A year ago, the rate was 3.96%. Four weeks ago, it was 3.98%. The mortgages in this week's survey had an average total of 0.19 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4%. This week's rate is 0.15 percentage points lower than the 52-week average.
  • The benchmark 15-year fixed-rate mortgage rose to 3.12% from 3.06%.
  • The benchmark 30-year fixed-rate jumbo mortgage rose to 3.75% from 3.68%.
  • The benchmark 5/1 adjustable-rate mortgage rose to 3.28% from 3.18%.

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Weekly national mortgage survey

Results of's Feb. 17, 2016, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

30-year fixed15-year fixed5-year ARM
This week's rate:3.85%3.12%3.28%
Change from last week:+0.07+0.06+0.10
Monthly payment:$773.53$1,149.01$720.81
Change from last week:+$6.58+$4.78+$9.04

Mortgage analysis

Builder confidence, housing starts slide

Homebuilder confidence took a hit this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Tuesday.

The index dropped to 58 from an upwardly revised 61 in January. A reading higher than 50 indicates that more builders have a favorable view of market conditions than those who don't.

"Though builders report (that) the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market," Ed Brady, NAHB chairman, says in a statement.

Separate data released Wednesday from the U.S. Census Bureau and the Department of Housing and Urban Development show that housing starts dipped by 3.8% from December to January to a seasonally adjusted annual rate of 1.099 million units. However, last month's rate is 1.8% higher than the January 2015 rate.

"Rain, snow and El Nino all showed up during the month," Joel Naroff, president and chief economist for Naroff Economic Advisors in Holland, Pennsylvania, says in a blog post. "That weather played a major role in the construction decline can be seen by the minimal decline in permit requests."

Refinance apps dominate

Mortgage applications jumped 8.2% last week compared with the week prior, according to the Mortgage Bankers Association's weekly survey.

The unadjusted purchase index rose 2% and was 30% higher than the same week in 2015. Additionally, refinance activity reached its highest level in a year, comprising 64.3% of all applications.

The market has been more purchase-driven in the greater Boston area, Koss says.

"I think having a little bit warmer weather and also just a healthy economy coupled with a lack of inventory has made people very active on the buying side."

If you're thinking about buying but have been on the sidelines, don't resort to panic-buying because you fear missing out on a good interest rate.

"(Rates) are still historically good, whether they move up a half a point or go down a half a point," he says.


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