The latest info on mortgage rates from Freddie Mac, the MBA, and Bankrate plus the Jobs Report and the FOMC minutes and what it means for mortgage rates…
Freddie Mac Reported:
- 30 year fixed rate mortgages averaged 3.89%
- This is down from last week when it averaged 3.97%
- Last year at this time, 30 year fixed rate mortgages averaged 4.46%
- 15 year fixed rate mortgages averaged 3.10%
- This is down from last week when it averaged 3.17%
- Last year at this time, 15 year fixed rate mortgages averaged 3.47%
Check out the mortgage rate chart from Freddie Mac:
Frank Nothaft, vice president and chief economist, Freddie Mac said:
Mortgage rates were down across the board on a week of underwhelming economic releases. New home sales missed consensus expectations by selling at an annual pace of 458,000 units in October and the National Association of Realtors reported that pending home sales dipped in October by 1.1 percent. The ADP’s estimate for payroll growth in November was 208,000 jobs, under expectations of 225,000.
Nothaft’s remark was from BEFORE Friday’s Jobs Report and I will have more on that later…
30 year fixed rate mortgages decreased to 4.07%
15 year fixed rate mortgages were unchanged at 3.29%
30 year jumbo mortgages decreased to 4.12%
The Mortgage Bankers Association Reported:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.08% from 4.15%, with points increasing to 0.28 from 0.25 (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) increased to 4.11% from 4.10%, with points decreasing to 0.22 from 0.25 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15 year fixed rate mortgages decreased to 3.30% from 3.35%, with points remaining unchanged from 0.25 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The Take Away:
Friday’s Jobs Report may be good news for the economy but it isn’t good news for mortgage rates. According to the Bureau of Labor Statistics US employers added 321,000 jobs in November. This is the biggest increase in four years and the 50th consecutive month that nonfarm payrolls increased.
Labor participation was unchanged at a dismal 62.8% which does concern me. And not just from the viewpoint of someone that sells real estate.
Why are so few people working?
One tidbit of positive news for both employment and real estate was that the Associated General Contractors of America said that construction industry employment hit a 5 year high in November. They said that unemployment in construction fell to 7.5% which is the lowest rate for November in seven years.
Still this is a strong Jobs Report and good news for the economy is often bad news for mortgage rates. Normally, positive news about jobs means that mortgage rates increase. That has to do with investors moving their money from Treasury bonds to riskier investments. When that happens, the yields on Treasury notes rise and mortgage rates tend to follow.
Negative reports about new home sales, pending home sales and payroll did put downward pressure on rates but the positive Jobs Report may offset those. Plus it gets us closer to the day that the Fed raises rates.
Of course, the Fed is looking at lots of stuff, like new home sales. Earlier this week, HUD and the Census Bureau reported that new single-family home sale in September 2014 were 0.2% above the revised August level and 17.0% above the September 2013 level.
While the number of new home sales is still below a historically healthy level, I would point to the YoY increase as being a positive indicator.
Earlier this week, the Conference Board said that their Leading Economic Index increased 0.9% in October.
Ataman Ozyildirim, Economist at The Conference Board said:
The LEI rose sharply in October, with all components gaining over the previous six months. Despite a negative contribution from stock prices in October, and minimal contributions from new orders for consumer goods and average workweek in manufacturing, the LEI suggests the U.S. expansion continues to be strong.
Ken Goldstein, Economist at The Conference Board said:
The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015. This is consistent with our outlook for relatively good, but not great, consumer demand over the near term. Going forward, there are continued concerns about slow business investment and lackluster income growth.
It is stuff like this that may make people think that the Fed is closer to raising rates. Everyone looks for clues in this week’s FOMC minutes to get a hint about what the Fed is going to do about the Federal Funds rate.
Some of the highlights:
- Recovery in housing is still slow despite low interest rates
- A few participants pointed to continued strong growth in multifamily construction
- Economic activity was expanding at a moderate pace
- Labor market conditions had improved somewhat further
- Underutilization of labor resources gradually diminishing
- Household spending rising moderately
- Business fixed investment advancing
- Inflation still below the Committee’s objective
- The Committee expects economic activity will expand at a moderate pace
A strengthening economy means that the Federal Reserve could be getting closer to raising interest rates.
I wonder if we are getting close to the end of the greatest opportunity for buying a home in our life time?
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.