A roughly 7 basis point increase in 30-year mortgage rates and gains in bond yields from recent record lows could dampen refinancing applications a bit unless they motivate a significant group of fence-sitting borrowers to act.
Freddie Mac's weekly survey shows a 7 basis point increase in the average 30-year rate for the week that ended Thursday to 4.22% from record lows in conjunction with higher Treasury yields and improved housing data. The long-term rate-indicative 10-year Treasury yield as of late Thursday morning was at about 2.2% after dropping below 2% recently.
Credit Suisse in a report Thursday morning said the increase in rates seen this week on its survey could result in a decrease of about 200 points on the Mortgage Bankers Association's conventional refinancing index for this week when it comes out next Wednesday.
Mahesh Swaminathan, a managing director, says this projected drop represents about a 4% to 5% decline, based on Credit Suisse survey data showing the average mortgage rate rising to 4.35% Wednesday from an average of about 4.25% over the past two weeks.
"So if for the next three days it is at 4.35% the average for this week will probably end up like 4.32% or 4.33%," he said.
