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Mortgage rates at highest level since July

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SoldAtTheTop / The Paper Economy

(Read caption) This chart of mortgage rates over the past five years shows that 30-year and 15-year fixed mortgage rates both increased last week. For the 30-year rate (blue line), this marked the highest rate since July. For the 15-year rate (red line), it's the highest since September.

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The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

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The latest data is showing that the average rate for a 30 year fixed rate mortgage continued to climb rising 10 basis points to 4.66% while the purchase application volume increased 1.8% and the refinance application volume declined a 1.4% over the same period.

It's important to note that rates have been trending up for about eight weeks now and coincidentally somewhat in-line with the Fed making QE2 official.

While early scuttlebutt about QE2 measures worked to depress mortgage rates earlier this year, it appears that the actual implementation of the measures is not currently working to force them down any lower resulting in continued poor trends for purchase and refinance activity.

The purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

Could the Fed have reached a limit on the long end of the rate curve? We will have to wait to find out.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages as well as one year ARMs since 2006 (click for larger dynamic full-screen version).

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