Mortgage Rates Rise on Good News
The problem with an economic recovery is that interest rates tend to trend higher; luckily we’ve still got a ways to go before we’re anywhere near recovered (how mortgage rates move).
However, certain seemingly positive economic data contributed to a rise in mortgage rates this week, according to mortgage financier Freddie Mac.
The 30-year fixed averaged 4.84 percent for the week ending May 7, up from 4.78 percent last week, but well below its year-ago average of 6.05 percent.
The 15-year fixed climbed to 4.51 percent from 4.48 percent, but remains more than a point below the 5.60 percent average seen last year.
Meanwhile, the five-year adjustable-rate mortgage jumped 10 basis points to 4.90 percent, but still sits slightly below the 5.29 percent average from last May.
The one-year ARM increased a single basis point to 4.78 percent, but remains below the 5.29 percent seen a year ago.
“Mortgage rates rose slightly this week amid positive economic news that the economy may be approaching the bottom of the recession,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“In addition, the positive news was corroborated by Fed Chairman Bernanke when he stated that he expects economic activity to bottom out, then to turn up later this year. He also noted that the housing market is beginning to stabilize.”
Nothaft also cited consecutive months of increases in pending existing home sales and an increase in demand for prime mortgages.
But these two items can easily be attributed to the sale of distressed properties and the record low interest rates pushing demand higher, which to me isn’t the sign of a recovery.
The mortgage rates above are good for conforming mortgages with a loan-to-value of 80 percent; jumbo mortgages continue to price much higher.
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