The latest weekly average primary market rate for a conventional 30-year mortgage has come in 22 basis points higher than the previous week but successive weekly moves are unlikely to be as steep going forward and some refinancing opportunities remain, according to Freddie Mac's chief economist.
During the week ending Dec. 16 the 30-year rate most borrowers' loans have was 4.83%, up from from 4.61% the previous week. But Frank Nothaft, vice president and chief economist at Freddie, told this publication he does not expect to see successive 20 bp-plus weekly climbs in rate going forward and is sticking to his forecast for a stable to a slower climb through next year—although he noted it is possible investors could act unpredictably again.
This has been the fifth week in a row rates have risen in Freddie's closely watched survey, bringing the 30-year rate somewhat close to what had thought to be record lows a year ago when it averaged 4.94%—and Nothaft said he last refinanced his mortgage.
This puts the 30-year in a range that cuts off opportunities for some borrowers but still leaves some open for those who have "contract rates in excess of 5% or 6%," Nothaft said.
"There are still a fair number of them outstanding," he said, reiterating his forecast for a slow tapering off of refis.
With rates at this level, two types of refis that could gain more traction are refis out of 30-year product into 15- or 20-year loans. Borrowers that meet the market's underwriting standards and are more interested in lowering interest costs and loan terms rather than their monthly payments can take advantage of these even when 30-year to 30-year refis no longer make economic sense. Most 30-year borrowers still refi into 30-year product but Nothaft said as of the third quarter a "nontrivial" number of borrowers were refinancing into 15-year and 20-year loans.
The 15-year rate was at 4.17% during the most recent week, compared to 3.96% the previous week and 4.38% a year ago. (Freddie does not track the 20-year rate.)
The average rate for a five-year Treasury-indexed adjustable-rate mortgage in the most recent week was 3.77%, up from 3.6% a week ago but down from 4.27% a year ago. The average one-year Treasury ARM rate was 3.35% in the most recent week, up from 3.27% the previous week but down from 4.34% a year ago. Average points in the most recent week for all four types of loans Freddie tracks were 0.7.
