Mortgage rates post huge gains last weekby 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.
While much has been made of the sharp run-up in mortgage rates over the past month, it should be noted that there was a lot of cheering when rates nudged below the 4 percent mark on the way down. Now that we are again approaching the 4 percent mark, it needs to be said that this is still far closer to record lows than not.
Mortgage rates post huge gains
HSH.com’s broad-market mortgage tracker–our weekly Fixed-Rate Mortgage Indicator–found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) stormed ahead by eighteen basis points (0.18 percent) to 4.01 percent, its first foray over the 4 percent mark since the week ending June 1, 2012.
As well, the overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) put up a sixteen basis point (0.16 percent) rise to 3.21 percent for the week.
FHA-backed 30-year fixed-rate mortgages leapt by 18 basis points to jump to an average rate of 3.64 percent, while the most popular ARM–the 5/1 Hybrid–moved the least amount of the bunch, with just a seven hundredths of a percentage point (0.07 percent) upward bump to 2.70 percent for the week ending May 31.
Higher mortgage rates this week
This week will be telling. Good news will push mortgage rates higher, and even mediocre news might not cause any meaningful fall in rates.
About the only things which would cause falling rates would be soothing words from the Federal Reserve, something to the effect that the QE programs have no near-term expiry, or a bout of truly poor economic news (which would suggest much the same).
As such, it looks as though we’ll be looking at mid-3 percent conforming 30-year fixed rates in the rearview mirror. Is it possible the rise in mortgage rates has overshot the mark, given the modest economy and lack of inflation? Yes, it is, but the seesaw has tipped from one side to the other, and that’s we’re likely to find ourselves for at least a little while.
For this week, mortgage rates seem poised to rise again. Depending upon the incoming data, it could be a mild rise of another 6 to 8 basis points or another leap higher of perhaps double that.