Mortgage rates rose further this week on news of better-than-expected December retail sales and industrial production, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage inched up to an average 6.23 percent from last week’s 6.21 percent, while the 15-year fixed mortgage rate gained from 5.96 percent to 5.98 percent. Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.04 percent this week, with an average 0.4 point, up slightly from last week when they averaged 6.03 percent. One-year Treasury-indexed ARMs averaged 5.51 percent with an average 0.5 point, up from last week’s 5.44 percent.
“Interest rates drifted slightly higher following the latest positive economic reports,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Shoppers bustling through the holiday season boosted December’s retail sales above consensus expectations. In the same month, industrial production reversed a three-month decline and rose faster than had been anticipated.”
Nothaft said that concerns over inflation, which is expected to moderate at 2.5 percent this year “barring shocks from the energy sector,” will be a major factor in the movement of mortgage rates.
In Bankrate.com’s survey, mortgage rates increased for the sixth time in seven weeks with the average 30-year fixed rate rising to 6.26 percent — its highest point in the past 10 weeks. These loans had an average of 0.32 discount and origination points.
The average 15-year fixed-rate mortgage popular for refinancing climbed to 6.03 percent, according to Bankrate.com, and on larger loans, the average jumbo 30-year fixed rate increased to 6.52 percent. Adjustable mortgage rates moved higher as well, with the average 5/1 ARM growing to 6.2 percent and the average one-year ARM returning to the 6 percent threshold for the first time since August.
Bankrate.com said economic data continues to be overwhelmingly positive, a factor behind the increase in mortgage rates over the past half-dozen weeks. More evidence of underlying economic strength piled up this week, with retail sales for December exceeding expectations. The labor market continues to surprise, with weekly unemployment claims falling below the 300,000 mark. All of this has fueled concerns about inflation and delayed any possible Fed rate cut. As a result, investors are commanding higher yields on government and mortgage-backed bonds — mortgage rates are closely related to the yields on these bonds.