Mortgage rates move higher

Mortgage interest increased this week on the back of a positive jobs report that seemed to make it less likely that the Fed would delay plans to wind down its stimulus program later this year.

Rates on 30-year fixed-rate mortgages averaged 4.51 percent with an average point of 0.8 percent for the week ending July 11, up from 4.29 percent last week and 3.56 percent a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.

Rates on 15-year fixed-rate mortgages and five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans also increased, while rates on one-year Treasury-indexed ARMs remained the same.

“June’s strong employment led to more market speculation that the Federal Reserve will reduce future bond purchases causing bond yields to rise and mortgage rates followed,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “The economy gained 195,000 jobs in June, above the market consensus forecast, while revisions to the prior two months added 70,000 on top of that.”

“Moreover, hourly wages rose by 2.2 percent over the last 12 months and represented the largest annual increase in nearly two years. However, the minutes of the June 18 and 19 Federal Reserve’s monetary policy committee meeting, released July 10, stated that many members indicated further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of bond purchases.” Source: Freddie Mac