Improving economy leads to higher mortgage rates
The better-than-hoped for April employment report drove stock markets higher last week, dragging mortgage rates upward with them.
Given the economic optimism expressed last week, it does make one wonder what will happen when the economy really begins to fire on all cylinders. Will mortgage rates rise by a substantial amount?
Regardless, the chase for higher returns saw money flowed out of bonds and into stocks last week, lifting mortgage rates. A portion of the late winter-early spring decline in mortgage rates was erased last week, and some more seems likely.
Mortgage rates on the rise
According to the latest data from HSH.com, the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) rose by seven basis points (0.07 percent) to 3.68 percent, rising from 2013 lows.
Meanwhile, the overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) managed just a five basis point lift (0.05 percent) to 2.91 percent for the week.
FHA-backed 30-year fixed-rate mortgages followed along with a five basis point increase of their own, trekking to an average rate of 3.31 percent, while the most popular ARM--the 5/1 Hybrid--stayed closer to the previous week’s all-time record lows with just a two hundredths of a percentage point (0.02 percent) blip to 2.59 percent for the week.
Higher mortgage rates this week
Mortgage rates moved upward a little last week and seem poised to do so again this week.
While we are presently below the peak for rates so far this year, we won’t retest them this week, but we may wander back there before too long, should the good economic news persist.
Although that may trim the value of a refinance or two, the big picture hasn’t changed or diminished: mortgage rates will remain near record low levels, and if the Fed can be believed, may be becoming easier to get, too.