The average rate for a 30-year fixed rate mortgage rose eight basis points to 3.95% for the week ending Feb. 23, reflecting both an improving economy and housing market, according to new figures compiled by Freddie Mac.
The GSE reported in its weekly roundup that the rate on a typical 15-year FRM increased three basis points to 3.19%, but shorter-term rates declined.
The average rate for a five-year Treasury-indexed hybrid slipped 2bps to 2.8% while the one-year Treasury ARM fell 11bps to 2.73%.
Celia Chen, senior director, Moody's Analytics, told this publication the 30-year rate tracked by Freddie is likely to trend slowly upward over the course of the year to levels well above 4%, but noted that rates are likely to remain historically low. She said ensuing declines in refinancing may be offset to some extent by a slight strengthening in the housing and purchase loan market.
Chen noted that despite a recent downward revision in existing home sales for December, housing inventory continues to fall. With 6.1 months of supply, inventories are the lowest they have been since the housing market first began its plunge.
Meanwhile, Freddie reported that on average lenders were charging 0.8 of a point on 30- and 15-year FRMs, and 0.6 of a point on one-year Treasury ARMs.
A year ago, 30-year FRMs averaged 4.95%. The 15-year rate was 4.22%.
