MortgageMortgage Rates

Mortgage rates hit highest level since April

Rates rose to 3.05% this week, to its highest level since April

The average 30-year-fixed mortgage rose seven basis points to 3.05% for the week ending Oct. 14, to its highest level since April, according to Freddie Mac’s latest PMMS survey of mortgage rates.

Two weeks ago, rates rose 13 basis points to 3.01%, eclipsing the 3% mark for the first time since June. However, last week, rates fell to 2.99%. Mortgage rates typically move in tandem with the 10-year U.S. Treasury yield, which was 1.56% for Oct. 14.

Sam Khater, Freddie Mac’s chief economist, said in a statement that “as inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing.”

Mortgage rates have been kept low in part because of the Federal Reserve’s massive monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. The central bank has signaled that will eventually come to an end, however, and it is expected to begin to taper off its purchases when substantial further progress is made in the labor market.

Although rates remain at historic lows for now, market observers do expect rates to climb upward, eventually. Even a modest increase in rates could deter borrowers from seeking to refinance their mortgages.

How fine-tuning MSR valuations can help lenders improve decision-making

As rates change and the market shifts to a more purchase-driven origination environment, lenders need to carefully monitor margins and profitability. If we’ve learned anything in the past year, it’s that operational flexibility and accurate servicing valuation are key to lending profitability.

Presented by: Black Knight

A year ago at this time, the 30-year fixed-rate mortgage averaged 2.81%. The 15-year fixed-rate mortgage averaged 2.30% last week, up from the prior week, when it averaged 2.23%.

“Historically speaking, rates are still low, but many potential homebuyers are staying on the sidelines due to high home price growth. Rising mortgage rates combined with growing home prices make affordability more challenging for potential homebuyers,” Khater said.   

Mortgage application activity has also been largely flat. The latest mortgage application survey from the Mortgage Bankers Association (MBA) showed applications overall increased just 0.2%  for the week ending Oct. 8, compared to the prior week.

Joel Kan, MBA’s associate vice president of economic and industry forecasting, said that an increase in home purchase applications, which was a “welcome news,” offset a slight decline in refinances.  

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