SMALL TOWNS WITH VI­SION HAVE CHANCE TO THRIVE

The Denver Post - - FRONT PAGE - By Kathy Or­ton

Across ru­ral Colorado, com­mu­ni­ties in the same area, with sim­i­lar pop­u­la­tions and with com­pa­ra­ble as­sets are in much dif­fer­ent places eco­nom­i­cally, a dis­par­ity the last re­ces­sion only widened. »11A

Mort­gage rates in­creased for the sixth week in a row to highs not seen in more than two years.

Ac­cord­ing to the lat­est data re­leased Thurs­day by Fred­die Mac, the 30-year fixed-rate av­er­age climbed to 4.13 per­cent with an av­er­age 0.5 point. (Points are fees paid to a lender equal to 1 per­cent of the loan amount.) It was 4.08 per­cent a week ago and 3.95 per­cent a year ago. The 30-year fixed rate hadn’t been this high since Oc­to­ber 2014. It has climbed 66 ba­sis points in six weeks. (A ba­sis point is 0.01 per­cent­age point.)

The 15-year fixed-rate av­er­age edged up to 3.36 per­cent with an av­er­age 0.5 point. It was 3.34 per­cent a week ago and 3.19 per­cent a year ago. The five-year ad­justable rate av­er­age crept up to 3.17 per­cent with an av­er­age 0.5 point. It was 3.15 per­cent a week ago and 3.03 per­cent a year ago.

“The 10-year Trea­sury yield dipped this week fol­low­ing the re­lease of the Job Open­ings and La­bor Turnover Sur­vey,” Sean Beck­etti, Fred­die Mac chief econ­o­mist, said in a news re­lease. “As rates con­tinue to climb and the year comes to a close, next week’s (Fed­eral Re­serve) meet­ing will be the talk of the town with the mar­kets 94 per­cent cer­tain of a quar­ter-point rate hike.”

The rapid rise in mort­gage rates is due in part to ris­ing long-term bond yields. The 10-year Trea­sury is one of best in­di­ca­tors of where rates are headed. When yields go up, rates go up.

Although long-term bond yields have re­treated a bit this week, they re­main sig­nif­i­cantly higher than they were a month ago.

In an in­ter­view with CNBC on Mon­day, New York fed­eral bank pres­i­dent Wil­liam Dud­ley, who along with his col­leagues will de­cide next week whether to raise the Fed­eral Re­serve’s bench­mark rate, spoke about what’s driv­ing the mar­kets.

“What we’ve seen post-elec­tion is we’ve

seen bond yields up, eq­uity mar­ket up, dol­lar firmer,” he said. “My judg­ment is that it seems to be that what peo­ple are fac­tor­ing in is the like­li­hood of more fis­cal stim­u­lus and re­duced down­side risk to the econ­omy.”

Dud­ley went on to say that the bond mar­ket also is ex­pe­ri­enc­ing a bit of a “cor­rec­tion.”

“Bond yields, even a few weeks ago, were ex­traor­di­nar­ily low rel­a­tive to the likely path of mon­e­tary pol­icy in the years ahead,” he said. “I think the cor­rec­tion in the bond mar­ket is prob­a­bly a lit­tle bit more over­due.”

The sharp in­crease may be slow­ing, how­ever. Bankrate.com, which puts out a weekly mort­gage rate trend in­dex, found that more than half the ex­perts it sur­veyed said rates will re­main rel­a­tively un­changed in the com­ing week. The rest said they will fall.

Mean­while, mort­gage ap­pli­ca­tions were flat this week, ac­cord­ing to the lat­est data from the Mort­gage Bankers As­so­ci­a­tion.

The mar­ket com­pos­ite in­dex — a mea­sure of to­tal loan ap­pli­ca­tion vol­ume — slipped 0.7 per­cent from the pre­vi­ous week. The re­fi­nance in­dex dipped 1 per­cent, while the pur­chase in­dex ticked up 0.4 per­cent.

The re­fi­nance share of mort­gage ac­tiv­ity ac­counted for 56.2 per­cent of all ap­pli­ca­tions.

“Mort­gage rates on 30year loans have in­creased 50 ba­sis points since the week prior to the elec­tion, hit­ting their high­est level since Oc­to­ber 2014, and caus­ing re­fi­nance ap­pli­ca­tion vol­ume to dip 28 per­cent to a new low for the year,” said Mike Fratan­toni, MBA’s chief econ­o­mist. “Si­mul­ta­ne­ously, pur­chase ap­pli­ca­tion vol­ume is up al­most 12 per­cent. Re­fi­nances are al­most en­tirely driven by mort­gage rates, while pur­chase ac­tiv­ity is a func­tion of a broader set of vari­ables, in­clud­ing the state of the job mar­ket, de­mo­graph­ics and con­sumer con­fi­dence.”

The MBA also re­leased its mort­gage credit avail­abil­ity in­dex (MCAI) this week that showed credit avail­abil­ity in­creased in Novem­ber. The MCAI rose 1.6 per­cent to 174.1 last month. A de­cline in the MCAI in­di­cates that lend­ing stan­dards are tightening, while an in­crease sig­nals they are loos­en­ing.

“Mort­gage credit avail­abil­ity in­creased for the third con­sec­u­tive month in Novem­ber, driven by in­creased avail­abil­ity of con­ven­tional low down pay­ment and stream­lined re­fi­nance loan pro­grams,” said Lynn Fisher, MBA’s vice pres­i­dent of re­search and eco­nom­ics.

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