So much for the low rates; the popular 30-year fixed averaged 5.59 percent this week, up from 5.29 percent a week ago, but still better than the 6.32 percent seen a year ago, Freddie Mac reported today.
The last time it was higher was the week of Thanksgiving, when it averaged 5.97 percent; it will likely surpass that level by next week the way things are looking.
The 15-year fixed fared no better, rising to 5.06 percent from 4.79 percent, though still below its year-ago average of 5.93 percent.
“Mortgage rates followed the increase in bond yields this week as the May employment report showed that the economy lost fewer jobs than the market consensus had expected,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“Revisions to the jobs report for earlier months also showed the job loss was not as large as early estimates had indicated: March and April figures were revised to add an additional 82,000 jobs to the work force. As a result, federal funds futures rose after the report, signaling that the market expects the Federal Reserve may raise its benchmark rate sooner rather than later.
Good news often lifts interest rates, so the Fed is having even more trouble reining them in, which could lead to subsidized mortgage rates if they still believe low rates is the solution here.
Meanwhile, adjustable-rate mortgages couldn’t escape the carnage, with the five-year up to 5.17 percent from 4.85 percent and the one-year jumping to 5.04 percent from 4.81 percent.
A year ago, the five-year averaged 5.51 percent and the one-year averaged 5.09 percent.
“Higher mortgage rates are slowing refinancing activity but not demand for home purchases. Over the three-weeks ending June 5th, interest rates for 30-year fixed-rate mortgages rose nearly one-half of a percentage point,” Nothaft added.
“As a result, conventional mortgage applications for refinance fell each week during this period while applications for home purchases consecutively rose, according to the Mortgage Bankers Association.”
Home purchase demand isn’t really performing that well, it just seems to be climbing mildly thanks to typical seasonal demand and perhaps as a result of distressed prices; the story here is that refinance activity is tanking.
The rates above are good for conforming loan amounts with a down payment of twenty percent, jumbo loans continue to price at a premium.
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