Double whammy: Mortgage rates rise, employment fallsby Tim Manni
The mere 18,000 new hires in June, following two months worth of downward revisions, has really taken the steam out of any possible rally in the employment sector, and continues to foster some mortgage rate volatility at the moment.
“Market interest rates—including mortgages—began rising during the last week of June as investors moved money out of safe havens and tried to catch a stock market rise,” explains HSH.com VP Keith Gumbinger in the latest Market Trends newsletter.
As a result, that momentum pushed mortgage rates higher into last week, but the economic news released throughout last week was bleak enough as to at least partially-reverse the increase as we move into this week.
Last week, mortgage rates were up across the board. According to the latest numbers from HSH.com:
HSH.com’s broad-market mortgage tracker—our weekly Fixed-Rate Mortgage Indicator (FRMI)—found that the overall average rate for 30-year fixed-rate mortgages moved nine basis points higher, moving to an average of 4.88 percent.
FHA-backed 30-year fixed-rate mortgages moved eight basis points upward to close last week at 4.52 percent.
Hybrid 5/1 ARMs, whose five-year fixed period now averages just 3.47 percent, was up seven hundredths of a percentage point from the week prior. A borrower with a $300,000 loan willing to accept the risk of higher future payments would save about $20,000 over the next five years.
Will mortgage rates continue rising this week?
Mortgage rates spent the majority of last week on an upward trend, yet turning downward after Friday’s employment report. The weeks-long downturn in mortgage rates probably went a little farther than it should have, and the quick upturn was too much in the other direction.
At best, we’re back to the muddy middle for at least the moment. Mortgage rates should move back downward this week, however. As with gasoline prices, mortgage rates are also slower to fall than rise, but we’re betting on a five to perhaps seven-basis-point fall in the FRMI over the next five days.