Harrisburg PA Mortgage Market Recap – March 7, 2016
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Trends Are Beginning to Reverse
For most markets, the trend has been down in 2016: stocks, mostly down; commodity prices, mostly down; interest rates, mostly down; home sales, mostly down. Home prices have been the noticeable exception. They've trended mostly up, and continue to do so. The latest price data from CoreLogic show prices up 6.9% nationally.
That said, things have been changing up a bit in recent days. Stock prices have moved higher, as have commodity prices. Oil prices, in particular, have rallied strongly. You may have noticed gasoline prices at the pump are higher today than they were a couple weeks ago.
Interest rates have certainly picked up pace. Within the past week, the 10-year U.S. Treasury note has seen its yield rise 15 basis points. As the 10-year note goes, so, too, goes mortgage rates. Rates have risen to where they were a month ago. Rates are still low compared to the start of 2016 – the 30-year loan is still priced well-below 4% for best execution – but they have moved noticeably higher over the past week.
Higher rates will take some steam out of the refinance market. Last week, refinances were already down 7%, according to Mortgage Bankers Association data. We're sure we'll see another drop when the MBA reports for this week. That's no surprise; refinances are much more interest-rate sensitive than purchases.
As for purchases, we still see steady volume. The MBA reports applications were off 1% last week. But year over year, applications are up 27%. Mortgage activity suggests we should see robust housing activity this spring, though the start might be a little sluggish. The pending home sales index was actually down 2.5% for January.
Since the beginning of the year, we've been saying that low interest rates would hold through the first quarter of 2016. We still have a month to go, but we still think rates will remain accommodating. There is a caveat to our outlook: keep an eye on oil and stock prices. If they continue to trend higher, there is a good chance mortgage rates could hitch along for the ride.
Information provided by Jessica Regan.
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