What’s new with mortgage rates?by Tim Manni
Looking over the two latest mortgage-rate reports from HSH.com, it seems as though the decline we’ve been enjoying for much of 2014 has come to an end—at least temporarily.
“Well, it was a nice run while it lasted, but of late the selloff in stocks and the corresponding decline in yields and mortgage rates has switched places, with equities again appealing to investors at the expense of bonds,” wrote Keith Gumbinger, vice president of HSH.com, in the latest Market Trends newsletter. “Although the latest economic data wasn’t great, soothing words from Fed Chair Janet Yellen [last] week about the expected path of the economy and Federal Reserve’s intentions for policy seemed to spread a bit of cheer. While this was much to the liking of stock markets, the mix of mostly softer news kept interest rates from rising by much.”
At the end of last week, HSH.com reported a mixed bag of two rate increases and two decreases—both by a minimal amount.
On Wednesday, HSH.com’s wraparound weekly survey reported more of the same. Average mortgage rates and points for conforming residential mortgages rose during week ending February 18:
- 30-year fixed-rate mortgage: 4.42 percent, up 0.04 percent from the week prior
- 5/1 ARM: 3.14 percent, up 0.02 percent from the week prior
Why is the economy slowing?
“The 2014 decline in mortgage rates has ended for the moment, but just barely,” said Keith Gumbinger, vice president of HSH.com. “Even though the recent spate of economic data has been rather disappointing, hopes are still high that the slowness in the economy is temporary, and that we’ll start to see improvements as we move deeper into the year.”
Why is the economy producing weaker data? There are a number of reasons:
- For starters, the weather in many parts of the country has been awful
- Employers concerned about implementing the Affordable Care Act
- Slower economic growth in China
“It’s too soon to know, but expectations for growth in the first quarter are being marked down a little bit due to these items,” adds Gumbinger. “If they prove transient in nature as expected, we will see both economic improvement and somewhat higher mortgage rates as we go along, which is our expectation as the year moves forward.”
What about this week?
While mortgage rates seemingly ceased their declines in favor of an uptick, rates won’t rise too far or too fast. Expect an increase this week of another few basis points.