Positive data pushes mortgage rates higherby Tim Manni
Now more than ever, the direction of mortgage rates is largely dependent upon the direction of the economy.
“To some degree, markets are always dependent upon data to provide direction, with stronger or weaker reports adding volatility,” wrote Keith Gumbinger, vice president of HSH.com, in the latest Market Trends newsletter. “In the current environment, this may be exacerbated, since both stock and bond markets are trying to figure out when the Fed may start to exit the arena and position themselves to gain advantage (or limit damage) when this occurs.”
And according to the economic reports out last week, things are looking brighter.
“At this moment, the data are flashing more green than not, so mortgage rates are moving more toward the red than not,” wrote Gumbinger.
Mortgage rates rising
According to the latest weekly mortgage rates survey from HSH.com, mortgage rates of all stripes moved higher last week:
- 30-year fixed: The overall average rate for a 30-year fixed-rate mortgage (conforming, non-conforming and jumbo) moved higher by seven basis points (0.07 percent) to 4.34 percent
- 15-year fixed: The overall average rate for a 15-year fixed-rate mortgage (conforming, non-conforming and jumbo) increased by three basis points (0.03 percent) from the prior week’s value, rising to 3.47 percent
- FHA: The FHA-backed 30-year fixed-rate mortgage rose by six basis points but remained under the 4 percent mark at 3.97 percent
- 5/1 ARM: The overall 5/1 Hybrid ARM moved the least of the bunch, rising by two hundredths of a percentage point (0.02 percent), lifting to 3.04 percent for the week ending November 8
Mortgage rates were already on the rise by the time the October employment report was released on Friday. Both a report grading the health of the nation’s service sector—the ISM report– and the advanced estimate of the nation’s economic growth during the third quarter—the GDP report—indicated our economy is on more solid ground.
This week …
Since mortgage rates remain so data dependent, expect them to bounce around with “a bias to the upside.” As we always say, mortgage rates rise faster than they fall, so we’ll need a steady stream of weaker data to pressure mortgage rates down. According to Gumbinger, there isn’t an economic report out this week with “enough gravity” to do that.
“Amid warmer data, mortgage rates will be again rising as we move though [this] week,” wrote Gumbinger. “With the warmth spreading from [last] week bumping rates upward into [this] week, a good working number for [this] week would be an increase of around eight to 10 basis points.”