Mortgage Rates Fall Despite Employment Report

Mortgage rates should be firming given that the tenor of the spring economic reports has been much stronger than the reports released this past winter. However, mortgage rates are still finding room to fall.

Even the surprisingly upbeat unemployment report on Friday–a report that usually has a direct impact on mortgage rates–failed to push mortgage rates higher.

Why aren't mortgage rates rising?
Certainly, homebuyers and refinancing homeowners aren't questioning the lower mortgage rates, but it just doesn't seem to make much sense that when the economy is showing more consistent signs of improvement that mortgage rates would continue to fall.

"Global issues of course continue to play a role as a slower expansion in China and the ongoing Ukraine drama have seen investors interested in parking more of their funds in Treasuries, and it also may be that sky-high stock market is seeing some folks employing the old "sell in May and go away" strategy," said Keith Gumbinger, vice president of HSH.com, in the latest Market Trends newsletter.

"We cannot help a sneaking suspicion that without some regular upward trend for rates that pressure is building, making a pop higher in rates more likely than a more muted progression at some point."

Current mortgage rates
For the time being, mortgage rates continued their downward trend last week:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) declined by 0.04 percent to fall back to 4.38 percent.
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) eased by 0.03 percent, dipping to 3.58 percent for the week ending May 2.
  • FHA: FHA-backed 30-year fixed-rate mortgages declined by just 0.01 percent, falling to 4.09 percent for the week.
  • ARMs: Overall 5/1 Hybrid ARMs ticked lower by 0.01 percent to end the week at an average of 3.12 percent.

Are mortgage rates poised to pop?
"A growing economy despite a less-accommodative Fed (or, inversely, a less-accommodative Fed because of a growing economy) should be a key for firming interest rates," said Gumbinger. "There remain no indications that any spike in mortgage rates is imminent, but without regular, small increases, it does seem to us that some pressure may be forming, and a rise in mortgage rates expressed in rapid fashion could occur at some point."

Where mortgage rates are headed
For the last six months or so, mortgage rates have been holding steady inside a range of 4.21 percent (November 2013) to 4.63 percent (January 2014).  While HSH.com doesn't expect we will break out of that range, mortgage-rate shoppers should expect interest rates to move more toward the upper end of that range if things continue on their current path.

"We can't help but think that there will be at least some move upward from last week's slew of data, but we appear most likely to hold pretty steady again," concluded Gumbinger.

This article Mortgage Rates Fall Despite Employment Report originally appeared on The HSH Blog.

Want to save for that house? Invest in big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

You may also enjoy these real estate articles:

Current mortgage rates

Is it time to bring back the homebuyer tax credit?

Will marginal mortgage borrowers threaten the housing recovery?


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2952355, ~/Articles/ArticleHandler.aspx, 9/15/2014 5:42:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement