Signs of improvement seen in mortgage rates
The aftermath of the Fed’s meeting and Mr. Bernanke’s press conference remarks continued to roil markets last week, but there are some indications that the panic has subsided.
Mortgage rates rose last week
According to recent data, the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) leapt by 43 basis points (0.43 percent) to 4.62 percent, the highest average rate since August 2011.
The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) added 38 basis points to its average (0.38 percent), rising to 3.73 percent for the week.
FHA-backed 30-year fixed-rate mortgages rose by a whopping 49 basis points to move to an average rate of 4.30 percent, while the overall 5/1 Hybrid ARM moved added 43 hundredths of a percentage point (0.43 percent) to 3.34 percent for the week ending June 28.
Home sales and prices not yet affected by spiking rates
Much has been made of late about the rise in both existing and new-home sales and prices. However, the latest observations on sales are from May when mortgage rates were much lower, nearly pressing into new record territory at the beginning of the month. Also, home price gains, as measured by the widely-followed Case-Schiller index are from April.
None of these figures reflect the changes in the market which have occurred since then, and certainly not the pronounced spike in mortgage rates of the last 10 days.
In May, those near-record-low mortgage rates drove buyers into the market. A bump in rates at the end of the month and even into early June saw them scrambling to get deals in place. As such, home sales were of course higher in May, and will probably be for June (perhaps to a lessened degree) when those figures are revealed at the end of July.
However, it’s a reasonable expectation that, should mortgage rates hold near these levels, the sharp upward trend for home sales will soften, perhaps considerably.
Mortgage rates expected to decline this week
After popping strongly higher on June 20, 21 and 24, mortgage rates moderated as last week progressed, improving by more than 20 basis points from last Monday’s 4.63 percent daily conforming 30-year to Friday’s 4.42 percent.
Although markets remain tense and wary, mortgage rates seem poised to slip backwards as we move into this week. Failing an outsized improvement in the ISM manufacturing (seems unlikely) or service business reports (possible) on Monday and Wednesday respectively, that leaves us with only the June employment report as a concern for mortgage rates.