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Mortgage rates rise slightly, but they’re not part of the problem

As expected, certain economic signs proved stable enough to raise mortgage rates slightly at the end of last week, but it wasn’t by much. Unfortunately, of the reports that trended positive, housing wasn’t among them.

While there continues to be some issues holding back housing, mortgage rates remain quite low and are not part of the problem. Given the higher home prices in recent months, you could argue that it’s mortgage rates which are preventing affordability from slipping more than it otherwise would.

Current mortgage rates

According to HSH.com, mortgage rates of all stripes edged upward last week:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) rose by 0.04% to lift back to 4.42%.
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) climbed by 0.05%, rising to 3.58% for the week.
  • ARMs: The overall 5/1 Hybrid ARM moved 0.06% higher, ending the week at an average 3.13 percent.

Mortgage rates remain near 2014 lows

Outside of home sales, indicators are pointing to a firming economy, which usually brings higher mortgage rates. However, with plenty of available money and limited demand, mortgage rates continue to hold near 2014 lows. The lack of demand is easily seen in lower home sales so far this year, but even that may be changing for the better.

Know the mortgage rates you want

If you’re in the market for a purchase or a refinance mortgage loan, it’s important to have a mortgage rate or, more importantly, a range of mortgage rates in mind, so that when rates fall to that range you can pull the trigger on your transaction and capitalize on low interest payments.

Mortgage rates won't remain immune to an improving economy forever, and most market observers expect them to grind higher over time. However, it may not be a steady process, and a strong economic report may cause flares in rates at times.

For example, if Friday's April employment report shows outsized gains in hiring, rates could pop higher and hold as we await evidence to determine if the improvement is durable or fleeting.

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