Mortgage rates soared to levels not seen since last summer, as strong job growth in April suggested the Federal Reserve will raise its key funds rate sooner than expected, according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.
In Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage averaged 6.34 percent for the week ended today, up from last week when it averaged 6.12 percent.
The average for the 15-year fixed-rate mortgage this week is 5.72 percent, up from last week when it averaged 5.47 percent. Points on both the 30- and 15-year averaged 0.7.
One-year Treasury-indexed adjustable-rate mortgages averaged 3.9 percent this week, with an average 0.7 point, up from last week when it averaged 3.76 percent.
“Last month’s huge surge in employment figures reaffirmed market expectations that the Fed will move sooner now rather than later,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This put pressure on the bond market, and as yields grew, so did mortgage rates.
“The Producer Price Index (PPI) came out today higher than had been expected, due primarily to the continuing rise in energy prices. The Consumer Price Index (CPI) will come out tomorrow and with that the focus of concern shifts away from the lack of job growth and towards inflation as a deciding factor for the Fed in determining the timing of future action.”
Mortgage rates increased for the eighth consecutive week, reaching an eight-month high, according to Bankrate.com’s weekly national survey of large lenders. The average 30-year fixed-rate mortgage soared from 6.18 percent to 6.37 percent in Bankrate’s latest survey, with an average of 0.37 discount and origination points. The average 30-year fixed-rate mortgage is now the highest since Sept. 3, 2003.
The 15-year fixed-rate mortgage popular for refinancing climbed from 5.52 percent to 5.75 percent. The jumbo 30-year fixed-rate mortgage climbed 20 basis points to 6.57 percent, while the one-year adjustable-rate mortgage jumped 19 basis points to 4.09 percent. A basis point is one one-hundredth of one percentage point.
Mortgage rates soared yet again as better-than-expected job growth was reported for April, and the stellar report for March was revised upward. The strong and sustained job growth raised expectations for a Federal Reserve rate hike as soon as June. The much-improved job and economic outlook, in contrast to that seen just two months ago, caused investors in long-term government bonds to unwind their positions. As bond prices fell, bond yields and mortgage rates both climbed. Mortgage rates are closely related to the 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 – 6.44 percent with 0.13 point
Los Angeles – 6.35 percent with 0.6 point
Chicago – 6.48 percent with 0.09 point
San Francisco – 6.39 percent with 0.39 point
Philadelphia – 6.38 percent with 0.22 point
Detroit – 6.33 percent with 0.41 point
Boston – 6.46 percent with 0.1 point
Houston – 6.3 percent with 0.71 point
Dallas – 6.29 percent with 0.66 point
Washington, D.C. – 6.32 percent with 0.43 point
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