Fixed rate mortgages rose in the week ending Feb. 25 as rates backed up last week through Monday in response to adverse economic news, such as last week's Producer Price Index.
According to Freddie Mac's weekly survey, 30-year fixed mortgage rates jumped 12 basis points to 5.05%, its highest level since mid-January.
The 15-year fixed and 5/1 hybrid ARM rates were also higher by seven and four basis points, respectively, to 4.40% and 4.16%. Meanwhile, one-year ARM rates dropped eight basis points to 4.15%.
Application activity is likely to be pressured lower in response to the uptick, given borrower sensitivity to the economic environment, the job situation, and lower home price values.
Weather might also factor in again as it did in the last report. For the week ending Feb. 19, the Mortgage Bankers Association reported a 9% decline in the Refinance Index to ~2606 despite rates averaging 4.93% in that week, while the Purchase Index fell 7% to 197 area.
For the month of February, 30-year fixed rates averaged 4.99% compared to 5.03% in January, while refinancing activity through last week is running 9% higher. The impact of this on prepayments in March, however, will be overwhelmed by the delinquency buyout impact from the GSEs.
GNMA speeds for March are currently predicted to increase 16% from essentially flat in the February outlook.
Also contributing to the pickup is an increase in the number of collection days to 23 from 19.