Mortgage Rates Jump Slightly

Fixed-rate mortgages increased for the second consecutive week. However, further increases are not predicted in the short-term. Key averages previously hit their lowest levels since June in the month of October. Despite the recent increase, fixed-rate mortgage loans remain affordable by historical standards.

The recent rise in rates is attributed to signals of economic strength, specifically, improved employment numbers for the month of October.

“Fixed mortgage rates increased this week following stronger than expected economic data releases,” Frank E. Nothaft, Freddie Mac’s vice president and chief economist, said in a statement. “Nonfarm payrolls increased by 204,000 in October, above the consensus forecast. In addition, revisions added 60,000 additional jobs to the prior two-month releases.”

The average rate on a 30-year mortgage rose to 4.35 percent this week, an increase of 0.19 percentage point, according to the latest survey from mortgage buyer Freddie Mac. The 30-year average was 4.16 percent a week ago and was trending at 3.34 percent a year ago.

The average rate on a 15-year mortgage saw a modest increase, increasing by 0.08 percentage point. Previously at 3.27 percent, the 15-year average is now 3.35 percent. One year ago, it averaged 2.65 percent, an increase of 0.7 percentage point year-over-year.

The averages on hybrid adjustable-rate mortgage loans were mixed. The average on a five-year ARM increased by 0.05 percentage point week-over-week and is now at 3.01 percent. The one-year ARM average was static, remaining at 2.61 percent week-over-week.

Looking forward, rates are expected to hold steady in the short-term. In the latest Mortgage Rate Trend Index by Bankrate.com, 50 percent of the experts and analysts polled believed that rates will remain unchanged over the next week, while 30 percent predicted rates will trend downward .

“Mortgage rates spiked after the better-than-expected headline number for last Friday’s employment report. Now tapering talk seems to be delaying the date that the Fed slows its assets purchases. But the last time rates spiked like this, there was a noticeable slowdown in home purchase applications,” said Michael Becker, WCS Funding Group mortgage banker. “I think the Fed is aware of this and will attempt to calm the markets over the coming week. Therefore, I see mortgage rates holding steady in the coming week.”

 http://www.realtor.com/news/mortgage-rates-jump-slightly/
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