Stronger Economy Sparks Mortgage Rate Rise
Freddie Mac released its weekly update on national mortgage rates Thursday morning, and the results show mortgage rates climbing across the board for the most part.
Both 30-year fixed-rate mortgages (FRMs) and 15-year FRMs jumped 17 basis points over the past week, rising to 4.46% and 3.47%, respectively, and returning to levels last seen in mid-September.
The 5/1 adjustable-rate mortgage (ARMs) followed longer-term FRMs up, tacking on five basis points to reach 2.99%, their highest number in three weeks. Only very short-term, one-year ARMs got cheaper -- down a single basis point to 2.59%.
Commenting on the numbers, Freddie Mac Vice President and Chief Economist Frank Nothaft pointed out that recent economic data has been "stronger than expected." That might explain the rise in rates. A stronger economy is believed to give the Fed greater freedom to raise its target interest rate, which often spurs banks to raise the rates they charge ahead of time.
Hiring in November was stronger than expected at 215,000 estimated new jobs in the private sector, Nothaft noted, and October's estimate was also recently revised upward. Additionally, noted Nothaft, "new home sales rose 25 percent in the month of October to a seasonally adjusted 444,000 annual pace." This suggests that rising mortgage rates may not be depressing housing demand as much as initially thought.
Mortgage rates remain low by historical standards. A year ago, 30-year fixed-rate mortgages averaged 3.34% and 15-year FRMs were averaging 2.67%.
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