Fixed mortgage rates surged in Freddie Mac"s latest survey. The 30-year fixed mortgage rate jumped 52 basis points to 6.46%, which is its highest level since mid-August when it averaged 6.47%. 15-year fixed rates were up nearly as much at 51 basis points to 6.14%. They 5-year hybrid ARM also recorded a significant increase at 24 basis points to 6.14%. Only the one-year ARM was little changed at 5.16% compared to 5.15% last week. Freddie"s chief economist, Frank Nothaft, noted ARMs "showed smaller gains in part due to the Federal Reserve"s October 8 inter-meeting cut in the overnight lending rate."
This should slow mortgage application activity this week. Yesterday, the Mortgage Bankers Association reported a 12.5% gain in the Refi Index to 1514 for the week ending October 10 as mortgage rates declined 16 basis points to 5.94%, according to Freddie Mac"s survey.
The impact of the higher rates will show up in the November report (released in December). Currently, speeds in November are expected to be down over 10% from October's estimates. Contributing to the slowing is four less collection days.