Mortgage Rates Continue Climb. ARMs Gain in Popularity

Freddie Mac released its weekly update on national mortgage rates this morning, showing continued strong growth in interest rates nearly across the board.

Thirty-year fixed rate mortgages (FRM) and 15-year FRMs both rose seven basis points, to 3.98% and 3.10%, respectively, their highest rates since April of last year and their sixth straight week of increasing. 5/1 adjustable rate mortgages jumped five basis points to land at 2.79%, while one-year ARMs held steady at 2.58%.

Freddie Mac Vice President and Chief Economist Frank Nothaft attributed the rising rates to "a solid employment report for May. The economy added 175,000 new jobs and the number of discouraged workers fell by 780,000 to the fewest since September 2009." Also, the labor force increased by 420,000 workers. That would mean more people potentially able to compete for mortgages.

Nothaft drew attention, too, to how "the ongoing run up in fixed mortgage rates [is making] adjustable-rate mortgages (ARMs) ... more popular among homeowners looking to refinance and for home purchasers."

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