Fixed mortgage rates moved higher in the week ending Feb. 23 in response to the recent sell-off related to favorable economic news and progress on Greece.
Freddie Mac reported that 30-year fixed rate mortgages averaged 3.95% after holding for three straight weeks at a record low 3.87% and that 15-year fixed rates rose three basis points to 3.19%.
Meanwhile, adjustable loan rates were lower with 5/1 hybrids declining two basis points to match its record low of 2.80%, while one-year ARMs set a new record low of 2.73%, down 11 basis points from last week.
Mortgage rate levels and thus refinancing activity have been hampered by capacity constraints at mortgage lenders. This is evident through the wide primary-secondary spread which is at around 104 basis points currently.
Morgan Stanley analysts said in recent research that in normal times, the 30-year fixed mortgage rate would be 50 basis points lower for the current level of rates, or closer to 3.40% area.
Higher mortgage rates crept into refinancing activity last week with the Mortgage Bankers Association's Refinance Index falling 4.8% to 4320 with refinancing share also lower to 80.1% from 81.1%.
Activity is likely to have slipped this week as well. However, the index is expected to remain above 4000.