mortgage

Mortgage rates creep up a little, but remain in refinancing territory

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Mortgage rates edged up this week, following more reassuring economic news that caused the 10-year Treasury yield to rise.

Positive news pushes up on rates

The yield on the 10-year Treasury rose early in the week, as economic news on construction spending was positive and the Institute of Supply Management's report showed that the manufacturing sector was gradually improving.

In addition, last Friday's report on consumer spending showed that consumers -- whose spending accounts for about 66% of U.S gross domestic product -- continued to increase their spending. All this positive news reassured investors and caused safe haven Treasuries to sell off in the 1st week of March, moving their yields up.

Responding to this move in Treasuries, mortgage rates crept up, too.

Mortgage rates this week

  • The benchmark 30-year fixed-rate mortgage rose to 3.82% from 3.8%, according to Bankrate's March 2 survey of large lenders. A year ago, it was 3.93%. Four weeks ago, the rate was 3.88%. The mortgages in this week's survey had an average total of 0.18 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4%. This week's rate is 0.18 percentage points lower than the 52-week average.
  • The benchmark 15-year fixed-rate mortgage was virtually unchanged, rising to 3.1% from 3.09%.
  • The benchmark 30-year fixed-rate jumbo mortgage rose to 3.74% from 3.7%.
  • The benchmark 5/1 adjustable-rate mortgage rose to 3.32% from 3.24%.

Weekly national mortgage survey

Results of Bankrate.com's March 2, 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:3.82%3.1%3.32%
Change from last week:+0.02+0.01+0.08
Monthly payment:$770.71$1,147.41$724.44
Change from last week:+$1.88+$0.79+$7.25

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Mortgage analysis

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Is a dip in home sales ahead?

The National Association of Realtors reported that its pending home sales index was down in January, with the Southern region the only one in which the index was up. This is an indication of a dip in home sales ahead in all regions except the South.

And the Mortgage Bankers Association reports that mortgage applications were down 4.8% for the week ending Feb. 26, compared with the previous week (which included an adjustment for the Presidents Day holiday). Refinances as a percentage of mortgage activity were down to 58.6%, from 61% for the previous week.

To refinance or not?

So should you consider refinancing now before rates start rising more? Or should you wait a bit to see if there is any respite from higher rates? James Sahnger, a mortgage broker with Schaffer Mortgage Corp. in Palm Beach Gardens, Florida, says the best thing to do is talk to a lender and see what he or she can do for you.

And Mike Henry, senior vice president of residential lending at Dollar Bank in Pittsburgh, says you should definitely look into refinancing if your current interest rate is 1% or 2% above today's prevailing rates. However, also take into account the impact of closing costs.

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You probably should lock

What about locking in today's interest rates? Sahnger says: "I'm currently advising people to lock at application because, while everyone would like to have a lower rate, rates can rise quickly and no one wants a higher rate than what was offered at the beginning of the process. Also, while rates can come down, they typically do so slowly, but when they reverse, they do so quickly."

Henry advises, "If it works for, you then lock it in and you eliminate the risk of rates going up."

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