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Mortgage rates declined last week

Mortgage rates managed to ease back last week, after several consecutive increases.

A solid employment report on Friday was a boost to the economy. Without some softer economic data to offset the job report, however, mortgage rates are likely firm up again, so potential borrowers are encouraged to act now.

Mortgage rates fell last week

According to recent data, the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) eased by seven basis points (0.07 percent) to 4.55 percent, taking back just a portion of the previous week’s huge jump.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) also managed a seven basis points (0.07 percent) decline 3.66 percent for the week.

FHA-backed 30-year fixed-rate mortgages saw a tenth of a percentage point trimmed off the previous week’s average, so there was a slide to 4.20 percent, and the overall 5/1 Hybrid ARM added to its average just a lone one one-hundredth of a percentage point (0.01 percent), with the average rising to 3.35 percent for the week ending July 5.

Falling mortgage rates won’t last

Mortgage rates managed a little dip last week, as the markets settled down after the last Fed meeting subsided. However, the firm employment report on Friday generated another strong upward move in interest rates, and that puts us on track this week week to move higher again.

Late last Friday, the influential 10-year Treasury yield had risen by some 20-plus basis points from Wednesday, and that should be more than sufficient to wipe out last week’s dip and then some.

Failing a spate of softness in the coming data--and this week features a fairly light calendar of economic data--the feature of the week will be the minutes of the last Fed meeting, which exacerbated the rout Mr. Bernanke initiated way back in May. Unless there’s something in the minutes to suggest otherwise (unlikely), we will expect to see mortgage rates rise by 10-15 basis points this week as volatility continues, so you’re encouraged to act now.

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