Long-term U.S. mortgage interest rates shot up in the latest week again, in response to investor optimism in the wake of a positive jobs report, according to mortgage giant Freddie Mac Thursday.
During the week ended November 12, 2015, the average rate on a 30-year fixed rate mortgage (FRM) jumped to 3.98 percent, excluding fees, up from 3.87 percent last week. The new rate is a two-and-a-half week high, but it is still slightly lower than a year ago when the average rate hit 4.01 percent.
The 15-year FRM also bounced upward, rising to an average rate of 3.20 percent, up from 3.09 percent the previous week and tied with last year at this time when the rate was also 3.20 percent.
The second straight week of major rate increases can be traced to an unexpectedly robust employment scene improvement as well as investor confidence in a Federal Reserve rate hike before the end of 2015.
“A surprisingly strong October jobs report showed 271,000 jobs added and wage growth of 0.4 percent from last month, exceeding many experts’ expectations,” explained Freddie Mac chief economist Sean Becketti. “The positive employment reports pushed Treasury yields to about 2.3 percent as investors responded by placing a higher likelihood on a December rate hike. Mortgage rates followed with the 30-year jumping 11 basis points to 3.98 percent, the highest since July. There is only one more employment report before the December FOMC meeting, which will have major implications on whether we see a rate hike in 2015.”
All the upbeat economic news also pushed adjustable rate mortgage (ARM) rates higher as well. The average rate on a one-year ARM grew to 2.65 percent, up from 2.62 percent the week before and up from 2.43 percent during the same week of 2014.