Looking at the average mortgage rates reported this week by Freddie, the MBA and Bankrate plus the FHFA and the latest on jobs, unemployment and the economy…
FHFA released their latest data on mortgage rates. While not as up to date as the information from Freddie, the MBA or Bankrate.com. it is good for a “Big Picture” view of mortgage rates. FHFA said:
The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.06% for loans closed in late September, down 2 basis points from 4.08% in August.
The average interest rate on all mortgage loans was 4.07%, down 2 basis points from 4.09% in August.
The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.31%, a decrease of 2 basis points from 4.33% in August.
The effective interest rate on all mortgage loans was 4.22% in September, down 2 basis points from 4.24% in August. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.
The average loan amount for all loans was $281,000 in September, down $6,100 from $287,100 in August.
Check out the mortgage rate chart from FHFA:
Freddie Mac Reported:
- 30 year fixed rate mortgages averaged 4.02%
- This is up from last week when it averaged 3.98%
- Last year at this time, 30 year fixed rate mortgages averaged 4.16%
- 15 year fixed rate mortgages averaged 3.21%
- This up from last week when it averaged 3.13%
- Last year ago at this time, 15 year fixed rate mortgages averaged 3.27%
Check out the mortgage rate chart from Freddie Mac:
The average rate for 30 year fixed rate mortgages increased to 4.14%
The average rate for 15 year fixed rate mortgages increased to 3.34%
The average rate for a 30 year jumbo mortgages increased to 4.14%
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 4.17% from 4.13%, with points increasing to 0.22 from 0.21 (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 decreasing to 0.11 from 0.13 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15 year fixed rate mortgages increased to 3.38% from 3.28%, with points increasing to 0.31 from 0.24 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Jobs, Unemployment and Mortgage Rates:
This week’s report on jobs and unemployment is a great indicator of where the economy is and could be headed. Also, we normally see some movement in mortgage rates after any positive or negative economic news. And we know that the Fed is watching unemployment numbers as they determine when they will raise rates.
Wall Street’s biggest banks remain convinced the Federal Reserve will raise interest rates by June 2015 and economists also said the market was underestimating how aggressively the U.S. central bank will tighten policy.
The October employment report was good but not terrific. Interest rates are not moving much yet but we should keep our eyes open for any changes this coming week. Besides, the rates above are ALL from BEFORE this report.
- October’s unemployment rate declined to 5.8%
- The October jobless rate was at the lowest level since mid-2008
- Job creation missed expectations
- Labor participation rate was 62.8%
- Average hourly earnings for all workers rose 0.1%
- Average hourly earnings for all workers up 2% over the past 12 months
- Wage growth is still low
- U-6 declined to 11.5%
- The average workweek increased
The most important thing in my opinion is the lack of growth in wages. All the talk about mortgage rates, home prices and the required amount of down payment are meaningless IF most Americans are just barely getting by. The weak labor market of the last seven years has put enormous downward pressure on wages.
With wage growth stuck in low gear, it is unlikely the Fed will raise rates anytime soon. But how soon is soon?
Is June soon?
I am glad to see U-6 decline. As I have stated in the past, I think U-6 is often overlooked by the media and is a very important indicator of the strength of our economy. U-6 is a broader measure of the unemployment situation. It includes people working part time despite wanting full time work AND people not actively looking for work but want a job and have not been able to find one or have given up on finding a job.
Yes, job growth has been good but it is STILL not super strong. Despite the improvements, we still have a long way to get back to where we were before the great recession. At the rate jobs were added in October (214,000), it will be 2018 before we return to 2007 normalcy. This report is a positive sign that the economy is growing, but it’s simply not enough for most Americans.
Also, the Associated General Contractors of America reported this week that construction employers added 12,000 jobs in October. Construction employment is at the highest level since May 2009. Since this is a real estate blog, gains in construction employment are of particular interest.
The Take Away:
In general, a strong economy means rising or higher mortgage rates. This year, however, that hasn’t been true. Sure we have heard plenty of predictions that rates would rise. In 2013, we heard rates would rise in 2014. This year we are hearing that rates will rise in 2015.
Mortgage rates probably won’t be affected much by this employment report.
Notice I said probably…
However, we do know the Fed has stopped QE and they will be raising rates sometime soon.
All that being said, I think it is a strong possibility that we will see mortgage rates rise in 2015.
And we did see rates increase this week…
Even if mortgage rates bounce around at pretty much the same level until Fed raises rates, that won’t mean much since home prices are STILL increasing.
So IF buying a home makes sense for you, I strongly suggest that you get the ball rolling NOW.
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.