“Good News: Mortgage Rates Rise”by Tim Manni
You may be saying, “Huh?”
Remember, the firming of rates is just one part of an overall economic recovery, and that’s a good thing, according to the latest issue of HSH.com’s Market Trends Newsletter:
No, it’s not good news that mortgage rates are firming up a bit; rather, it’s good economic news that is fostering the mild rise in rates. As the worst of the recession ever-so-slowly begins to fade behind us, and the technical recovery starts to include wider facets of the economy, borrowers and mortgage-watchers should become more accustomed to hearing of firmer rates in the marketplace.
It’s worth remembering that the rock-bottom interest rates seen at times over the past year were both the result of, and corresponding responses to, extreme economic conditions which no longer fully exist.
How much did rates rise last week?
HSH’s Fixed-Rate Mortgage Indicator (FRMI) rose by eight basis points [last] week to an average 5.49%. HSH’s indicator includes rates for conforming, jumbo and the GSE’s “high-limit” conforming products in its calculation. The FRMI’s 5/1 Hybrid ARM companion rose by just two basis points, finishing the survey week at 4.52% Conforming 30-year FRM averages rose by nine basis points, continuing a three-week rise.
Mortgage Rates: The Initial Indicator
If the economy really is getting better, though, Treasury yields — and especially mortgage rates — are the first to reflect this (just as they reflect impending weakness when the economy is declining). We are moving back toward an investment and mortgage market with less overt government distortion, and such signals — collective expressions of millions of investors — should be paid at least some heed.
For the moment, mortgage rates have mildly risen. If we get more clues next week that the economy is gaining its footing, we’ll probably see more upward pressure on interest rates. However, there are considerable headwinds for the economy at the moment, and these should have a tempering effect on interest-rate increases.
Click here to continue reading “Good News: Mortgage Rates Rise.” HSH.com’s free Market Trends Newsletter, an in-depth analysis of various financial markets from the week prior, is published every Monday. Email subscribers receive it in their inbox Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.