Last week was big for mortgage ratesby Tim Manni
Below is an excerpt from of our latest Market Trends newsletter, Keith Gumbinger’s latest examination of the economic conditions that influenced mortgage rates. Sign up to receive the Market Trends in your inbox Friday evening.
A cascade of fresh economic data came out last week, variously reflecting economic conditions in both March and April. A “big picture” look at the data might lead one to an “economy is still troubled” conclusion despite the current 2.5 percent run rate for Gross Domestic Product.
Mortgage rates and other interest rates had been on a flat to easing trend for much of last week as most of the data did little to dispel the notion that we remain in a rough patch, one even the Federal Reserve implicitly acknowledged at the close of its meeting on Wednesday.
There was plenty of downbeat news available last week to create additional cause for concern, but one or two shining reports took the gloom out of the market, at least for now.
Mortgage rates are likely to rise somewhat this week as a result.
Mortgage rates set records last week
HSH.com’s broad-market mortgage rate tracker found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) eased by four basis points (0.04 percent) to 3.61 percent, another new low for 2013 and close to “all-time” record lows set last year.
The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) dropped by three basis points (0.03 percent) to 2.86 percent for the week, another actual all-time low.
FHA-backed 30-year fixed-rate mortgages followed along with a decline of two basis points (0.02 percent), falling to an average rate of 3.26 percent (record low by two basis points) and was accompanied by a three-hundredth of a percentage point slip in the overall average rate for 5/1 Hybrid ARMs, which trekked down to an average 2.57 percent–another new low water-mark for the most popular ARM.
Mortgage rates will move away from record lows
As far as interest rates go, it took an accumulation of fair economic news over a period of months and some considerable market optimism about the economy’s future to bump them up during the late winter and early spring.
That trend did an about face over the last six weeks or so as the economic news turned decidedly darker. Is the positive employment report the start of a new spate of solid news, or simply a bright spot in an otherwise dim sky? One report doesn’t change the overall trend, but may be enough to allay concern about a deeper downturn forming.
For the moment, the brighter employment picture on last Thursday and Friday was sufficient to cause a reversal in the decline in interest rates. The influential 10-year Treasury bounced upward by more than a tenth-percentage point last Friday, so it’s to be expected that at least some of that will show in mortgage rates as we round into this week. Many popular mortgages have been easing to record or near record lows, but will move away from them this week, when a 5 or 6 basis point rise in HSH.com’s fixed-rate mortgage indicator seems most likely.