Mortgage rates were higher in the week ending Jan. 27 following higher Treasury yields that responded to stronger economic data this week, said Freddie Mac Chief Economist Frank Nothaft.
The 30-year fixed mortgage rate averaged 4.80% with an average 0.7 point compared with 4.74% last week.
This places the no-point rate at just under 5% and keeps many credit-eligible borrowers out of the refinancing window.
This has been evident in the Mortgage Bankers Association's (MBA) Refinance Index, which has ranged between 2000 and 2300 in January, down from the 4000 to 5000 area in mid-fall when 30-year mortgage rates were in the 4.20% area.
Scott Buchta,head of investment strategy at Braver Stern Securities, said a rally of 50 basis poitns or more is needed in order to see a significant jump in the index.
For the month of January, 30-year fixed mortgage rates averaged 4.76% compared to 4.71% in December, while through the first three weeks of January the Refinance Index average is down 9% from the previous month. This will filter into February prepayment activity which is reported in March.
At this time, conventional speeds are projected to decline 20% in response to the lower activity as well as a lower day count. This follows a 20% decline projected in January.
By the February prepayment report, FNMA 2009 and 2008 vintage 4.5s are predicted to prepay at 11 and 21 CPR from 24 and 41 reported in December. Meanwhile similar vintage 5s are anticipated to prepay at 16 and 24 CPR compared with 27 and 42 in the last report, while more seasoned vintages are seen at around 20 CPR from 30+ CPR.
In other mortgage terms, Freddie Mac reported 15-year fixed-rate mortgages increased four basis points to 4.09%, while 5/1 hybrid ARMs and one-year ARM rates gained one basis point to 3.70% and 3.26%, respectively.
