This week’s average mortgage rates from Freddie Mac, the MBA and Bankrate. Plus the latest economic news and what it means for real estate and rates!
Freddie Mac Reported:
- 30 year fixed rate mortgages averaged 4.01%
- This is down from last week when it averaged 4.02%
- Last year at this time, 30 year fixed rate mortgages averaged 4.35%
- 15 year fixed rate mortgages averaged 3.20%
- This is down from last week when it averaged 3.21%
- Last year at this time, 15 year fixed rate mortgages averaged 3.35%
Check out the mortgage rate chart from Freddie Mac:
Frank Nothaft, vice president and chief economist at Freddie Mac said:
Fixed mortgage rates were slightly down on mixed results from October’s employment report. While the unemployment rate declined to 5.8 percent, nonfarm employment rose by 214,000 jobs, which was below consensus expectations.
Not a big change from the previous week in the average mortgage rates reported by Freddie Mac. As I said last week, I did not expect a huge change in mortgage rates from the October Employment report. More on employment in a moment…
30 year fixed rate mortgages fell to 4.13%
15 year fixed rate mortgages fell to 3.32%
The average rate for a 30 year jumbo mortgage rose to 4.15%
The Mortgage Bankers Association Reported:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) increased to 4.19% from 4.17%, with points increasing to 0.26 from 0.22 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 30 year fixed rate mortgages with jumbo loan balances (greater than $417,000) remained unchanged at 4.13%, with points increasing to 0.15 from 0.11 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15 year fixed rate mortgages remained unchanged at 3.38%, with points decreasing to 0.22 from 0.31 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Despite the historically low mortgage rates, mortgage applications decreased 0.9% from one week earlier. The unadjusted Purchase Index was 11% lower than the same week one year ago.
The Take Away:
Mortgage rates didn’t change much this week. Rates change constantly and as the economy improves, we should see mortgage rates start to climb! So how long will the low mortgage rates last?
Many consumers think that we are seeing the end of super low mortgage rates. According to a recent survey conducted by Fannie Mae, 94% of U.S. consumers think that mortgage rates have stopped dropping.
Whether or not that will be true is hard to say but this echoes the sentiment of many economists.
Something else that should help the real estate market in the coming months is rising consumer sentiment. The preliminary reading on consumer confidence from the University of Michigan came in well above expectations. It was the highest reading since July 2007.
And the October retail sales report rose 0.3% from September, which was also above expectations. The US Census Bureau reported that advance estimates of U.S. retail and food services sales for October 2014 were 4.1% above the October 2013 level. This does point to a strengthening economy and mortgage rates could start to climb if this continues.
We also got revised GDP numbers for Q2 2014 from the BEA this week. Real gross domestic product (GDP) increased at an annual rate of 4.6% in the second quarter of 2014. The real estate and rental and leasing group increased 1.6%, reflecting an increase in housing.
We also need to consider the latest report from the BLS on Job Openings and Labor Turnover for the month of September. While this report is a month behind, it indicates that workers are getting more and more comfortable quitting their current jobs to move into other positions.
Jobs openings decreased in September to 4.735 million from 4.853 million in August. Despite the decrease from the previous month, this number has been very strong for the past year and indicates a healthy jobs market. Job openings are over 4 million for the eight consecutive month. The number of job openings are up 20% year-over-year compared to September 2013.
Quits are up 16% year-over-year. This is the highest level since April 2008. While it might not seem good to have many people quitting, this is a key factor in just how healthy the labor market is.
This is yet another month of solid job gains. Although it was great to see more people working, we still have to wonder about stagnant incomes. As the labor market improves, employers could be forced to raise wages.
We also got more positive news from the Federal Reserve. The Federal Reserve’s Labor Market Conditions Index (LMCI) rose 4 points last month. This is the 28th month of improvements in the LMCI. The index covers 19 separate indicators, including the national unemployment rate, average hourly earnings, and the transition rate from unemployment to employment.
If you look at these various stories separately, none of them are block busters.
However, combine all of these as we can see that the economy is growing and getting healthier.
Which means rising mortgage rates becomes an even stronger possibility!
The Fine Print:
As always, I am providing this to you for informational purposes only! I am not a mortgage lender and you should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.