After a dramatic drop last week, long-term mortgage interest rates have made an equally dramatic jump back up in the latest week, according to mortgage giant Freddie Mac, as markets responded to encouraging news in the jobs sector.
The average rate on a 30-year fixed rate conventional mortgage sprang up to 4.37 percent during the week ended March 13, excluding fees, from 4.28 percent the week before, after falling from 4.37 percent the week before that. Last year at this time, the average rate was only 3.63 percent.
“Mortgage rates edged up amid a week of light economic reports,” commented Freddie Mac vice president and chief economist Frank Nothaft in a statement. He cited an addition of 175,000 new jobs in February, and a 25,000 upward revision of the previous two months as part of the pressure on rates. Yet he also pointed to an increase in the unemployment rate to 6.7 percent, the first rise in a year, as a mitigating factor.
Rates are expected to make a slow but steady climb in 2014, as general economic conditions are predicted to improve and the Federal Reserve backs away from its vigorous stimulus program. The Fed had been buying up $85 billion of bonds for most of last year in an attempt to keep mortgage rates at rock bottom until the economy picked up speed. As of December, the Fed has begun tapering those purchases in anticipation of a healthier market.
The average rate on a 15-year fixed rate mortgage also rose, increasing to 3.38 percent, up from 3.32 percent the week before and up from 2.61 percent one year earlier. Rates on the one-year adjustable rate mortgage, however, fell to an average of 2.48 percent, down from 2.52 percent the previous week and from 2.64 percent in the same week of 2013.