Strong job growth fueled the sixth consecutive week of rising mortgage rates, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 5.89 percent for the week ended today, up from last week when it averaged 5.82 percent. The average for the 15-year fixed-rate mortgage this week is 5.47 percent, up from last week when it averaged 5.38 percent. Points averaged 0.5 on the 30-year loan and 0.6 on the 15-year.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.4 percent this week, with an average 0.6 point, up slightly from last week when it averaged 5.3 percent. The one-year Treasury-indexed ARM averaged 4.57 percent this week, with an average 0.7 point, up from last week when it averaged 4.47 percent.
“The stronger-than-expected employment report coupled with upward revisions in job growth for the previous two months renewed the market’s fear of inflation,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “That’s because strong job growth can put upward pressure on wages – a key factor in inflation – that in turn, can drive long-term rates higher.
“As mortgage rates drift upward, we expect to see some moderation in housing activity. With that said, though, we still expect that 2005 will undoubtedly be a record year for sales and new construction.”
In Bankrate.com’s weekly survey, fixed mortgage rates increased for the sixth consecutive week, and remain at a four-month high. The average 30-year fixed-rate mortgage climbed from 5.91 percent to 5.96 percent, Bankrate.com reported. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.38 discount and origination points.
The average 15-year fixed mortgage rate increased by the same amount, from 5.51 percent to 5.56 percent, while the average jumbo 30-year fixed-rate mortgage rose from 6.1 percent to 6.14 percent. Adjustable-rate mortgages were up at a more pronounced pace this week, with the average 5/1 adjustable-rate mortgage nudging higher from 5.51 percent to 5.62 percent, and the one-year ARM rising to 4.89 percent from 4.82 percent one week ago. The average one-year adjustable rate is the highest since June 2002.
A report of strong job growth, including upward revisions to prior months’ results, helped push mortgage rates higher. Evidence of an improving job market validated other positive economic news in recent weeks, such as economic expansion and strength in the manufacturing sector. In response to this accumulation of upbeat economic news, yields on 10-year Treasury notes have continued to climb. Fixed mortgage rates are closely related to yields on long-term government bonds.
The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.
New York – 5.97 percent with 0.21 point
Los Angeles – 6 percent with 0.56 point
Chicago – 6.08 percent with 0.01 point
San Francisco – 6.01 percent with 0.33 point
Philadelphia – 5.87 percent with 0.37 point
Detroit – 5.95 percent with 0.25 point
Boston – 6.02 percent with 0.11 point
Houston – 5.87 percent with 0.76 point
Dallas – 5.94 percent with 0.57 point
Washington, D.C. – 5.89 percent with 0.63 point
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