After declining for 5 of the last 6 weeks, mortgage rates increased this week, according to Freddie Mac’s Primary Mortgage Market Survey.
The average rate on a 30-year fixed rate mortgage increased from 4.76% to 4.81%. Fifteen-year fixed rate mortgages increased 7 basis points to 4.04%. 5/1 Adjustable rate mortgages increased from 3.57% to 3.62%, while 1/1 ARMs increased from 3.17% to 3.21%.
The 30-year fixed rate mortgage hit record lows in October 2010, dropping as low at 4.17%. Since that time, market conditions caused rates to increase significantly until the beginning of 2011. For most of 2011, interest rates have bounced back and forth in the 4.75%-5.00% range. Of late, rates have been fluctuating as a result of volatility in the Middle East as well as the disaster in Japan, and the rising cost of oil.
Despite the increase in rates, mortgage applications were up slightly last week, rising 2.7% in aggregate. Fannie Mae predicts that home sales will be weak this Spring. This prediction makes sense, because there is a huge surplus of unsold housing, and relatively little demand for it owing to continued high unemployment and demographic factors.
Fannie also predicts that mortgage rates will hit 5.5% by the end of 2011.
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