Mortgage Rates Spike To 8-Month High

Long-term mortgage interest rates soared to new 2015 all-time highs in the latest week, according to mortgage guarantor Freddie Mac , as investors took on more risk in the wake of positive employment data.

The average rate on a 30-year fixed rate mortgage (FRM) jumped to 4.04 percent, excluding fees, during the week ended June 11, 2015, up from 3.87 percent the week before. This is the first time the 30-year rate has averaged over 4 percent in over eight months, since the week of November 13, 2014, but it is still below its year ago average of 3.20 percent.

The 15-year FRM increased to 3.25 percent, up from 3.08 percent last week, but not quite as high as one year earlier when it reached 3.31 percent. The new rate is the highest in nine months when during the week of October 9, 2014 it averaged 3.30 percent.

Upbeat economic news pushed rates higher, Freddie Mac explained. “Mortgage rates rose above 4 percent for the first time since November 2014 as Treasury yields surged,” said Freddie Mac Deputy Chief Economist Len Kiefer. “Markets are responding to strong employment data. In May, the U.S. economy added 280,000jobs. Moreover, job openings surged to 5.4 million in April, up over 20 percent from a year ago.”

The jump in job creation was one sign that U.S. employers are feeling more confident in the economy and in their customers’ ability to spend. If the economy continues to improve, the Federal Reserve may actually raise interest rates by September, which would be the first increase in six years.

One-year adjustable rate mortgages (ARMs) slipped in the latest week, falling to 2.53 percent from 2.59 percent the week before. The previous year, the one-year ARM averaged even lower at 2.40 percent. The one-year typically moves in the opposite direction of the 30-year FRM.

 




Ads By Google

Trackback URI | Comments RSS

Leave a Reply