Mortgage rates show no sign of let-up – Keep rising


Employee Rhonda Lawson works in the customer call center area at Freddie Mac headquarters in McLean, Virginia, U.S., Photographer: Andrew Harrer/Bloomberg via Getty Images

[McLean, VA]  For the eighth consecutive week mortgage rates have continued their climb.  Now at 4.40% which is just two basis points in week- over-week reporting, it represents the highest mark of 2018.  The increase did not catch anybody off guard as the 10-year Treasury climbed over 2.90%.   The 10-year Treasury is known as the long-term index which affects mortgage rates.

 

Going forward, rates are projected to keep climbing.   Also, based on economic movement experts have suggested the Fed is positioned for three and perhaps four discount rate hikes for 2018.  This is designed to counter inflationary worries and keep the economy in check.

 

Consumers haven’t pushed the panic button as when evaluating year over year data, mortgage rates have only increased fourteen basis points.  That difference is well within the range of mortgage rate movement as they are very cyclical.

Rate recap for the week:

February 22, 2018

30-Yr FRM 15-Yr FRM 5/1-Yr ARM
Average Rates 4.40% 3.85% 3.65%
Fees & Points 0.5 0.5 0.4
Margin N/A N/A 2.75

Freddie Mac known technically as Federal National Home Loan Corporation purchases mortgages from it approved mortgage originators.  The primary market rate survey is the industry standard published weekly and is used by consumers and industry experts to gauge rate movement.

 

Yellen gives up gavel, mortgage rates continue to climb


Yesterday Dr. Janet Yellen chaired her last fed meeting of the Federal Open Market Committee.  The committee is part of the Federal Reserve leadership and they chose to keep rates unchanged.  Dr. Yellen passed the gavel to Trump nominee and incoming chair, Mr. Jerome Powell.  Yellen is an Obama appointee and since 2014 has served as chair.  The move was expected and even though the discount rate did not change there is speculation for increases as we move into the year.  The economy continues to move in a positive direction and it is the Fed’s mandate to manage monetary policy.

Mortgage

On the mortgage side of consumer finances, the benchmark 30-year fixed rate mortgage continued to rise.  In week over week reporting from the Freddie Mac primary market rate survey rates moved up seven basis points to 4.22%.  The increase in rates was expected based on economic conditions.  While consumer confidence also continues to improve the jump in rates affects affordability, especially for those on the margins where qualifying for a mortgage could be trickier.

 

Seven basis points represents almost 1/8th of a percent and while the movement is up there is no need for alarm as movement is based on a normal cyclical flow.  As a comparison in year over year reporting, this year’s rate of 4.22% is just three basis points from last year which was 4.19%


Snapshot of popular programs

February 1, 2018

30-Yr FRM 15-Yr FRM 5/1-Yr ARM
Average Rates 4.22% 3.68% 3.53%
Fees & Points 0.5 0.5 0.4
Margin N/A N/A 2.75

Mortgage rates continue to dip as do employment numbers


For most the quarter mortgage rates have been below 4%.  There has been a steady drip in week over week reporting and currently they ended August at 3.820%, which was down four basis points from the previous week.  The rate reported is for the benchmark 30-year Fixed Rate mortgage.  A full recap of popular programs is listed below:

August 31, 2017 (Freddie Mac Primary Market Rate Survey)

30-Yr FRM 15-Yr FRM 5/1-Yr ARM
Average Rates 3.82% 3.12% 3.14%
Fees & Points 0.5 0.5 0.5
Margin N/A N/A 2.74

 

As more consumers are purchasing homes or refinancing their existing mortgages, tighter competition for affordable mortgage money could be the result.  Thus, experts suggest the trend may reverse as rates move higher.  Of course, that is the projection but for now the current rate range appears stable.

 

Rates for the most recent week were posted Thursday or August 31st.  However, on Friday, September 1st the Bureau of Labor Statistics released monthly employment numbers for August.  While many were jubilant that July’s numbers exceeded expectations, August numbers brought them back to reality as there were 156,000 new jobs reported.  That number was a sharp reduction from July, and way below the 2016 monthly average of 187,000 new jobs.

 

Harvey

 

Of course, with the disaster of hurricane Harvey and other regional issues both mortgage and employment data should see some immediate adjustments.  Construction employment surely will see a pick-up, however in the Texas region there is some concern as industry experts peg undocumented construction labor at nearly thirty percent.  Based on the Trump administration unpopular focus on building “the wall” and removing undocumented people from the United States, many from that population are petrified of being targeted resulting in their unwillingness to come forward and perform jobs they have done prior to the attention of their plight.  The bottom line is if these workers are unavailable the cost of recovery will be much higher.