Looking at mortgage rates for the week of 5-7-206 and talking about the impact of this week’s jobs report…
Freddie Mac on Mortgage Rates:
Good news from Freddie Mac because after 2 weeks of increasing, rates dropped this week:
- 30 year fixed-rate mortgages averaged 3.61%
- Last week, 30 year fixed-rate mortgages average 3.66%
- Last year at this time, 30 year fixed-rate mortgages averaged 3.80%
- 15 year fixed-rate mortgages this week averaged 2.86%
- Last week, 15 year fixed-rate mortgages averaged 2.89%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.02%
Check out the chart from Freddie Mac:
Sean Becketti, chief economist, Freddie Mac said:
The Fed’s decision to stand pat followed by a week of assorted unsettling news drove Treasury yields lower. As a consequence, the 30-year mortgage rate drifted down to 3.61 percent, just 3 basis points above the low for the year. Since the start of February, mortgage rates have varied within a narrow range providing an extended period for house hunters to take advantage of historically low rates.
I must point out that this drop in rates came BEFORE this week’s economic news had time to sink in.
More on that later as we still need to see what the MBA and Bankrate reported…
Bankrate on Mortgage Rates:
Bankrate.com also reported that mortgage rates decreased:
The average 30 year fixed rate mortgages decreased to 3.77% from 3.83%
The average 30 year fixed rate jumbo mortgages stayed the same at 3.76%
The average 15 year fixed rate mortgage was 3.01%
The MBA on Mortgage Rates:
Sadly, the MBA reported that rates increased:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) was 3.87% for 80% loan-to-value ratio (LTV) loans. This is up from the 3.85% reported last week.
The average contract interest rate for 30 year fixed rate mortgages with jumbo loan balances (greater than $417,000) was 3.79% for 80% LTV loans. This is up from the 3.78% reported last week.
The average contract interest rate for 15 year fixed rate mortgages was 3.13% for 80% LTV loans. This is up from the 3.09% reported last week.
I am not sure why the MBA is reporting that rates increased unlike Freddie and Bankrate. The MBA also said that mortgage applications decreased 3.4% from last week’s level.
The Take Away:
This week’s decrease in mortgage rates is probably due to the news from the FED that I discussed last week. And the BIG news this week was the unimpressive Jobs Report and low GDP. I also watch the Bloomberg Consumer Comfort Index and it decreased to the lowest level of the year.
After this week’s bad news, it is even more unlikely that the Fed will raise their benchmark rate at their next meeting in June. Last week, the Fed said that labor market conditions have “improved further” since their last meeting, but “growth in economic activity appears to have slowed.”
Well, the weak GDP confirms that economic activity has slowed and this week’s Jobs Report should change the Fed’s opinion that the labor market has improved. Reuters did a survey after the Jobs Report and most Wall Street banks do not think the Fed will raise their benchmark rate in June.
This week’s bad news could mean that mortgage rates will either stay low or possibly even decrease.
Even IF mortgage rates did increase, they would have to increase dramatically to no longer be considered low…
As always, these are the average mortgage rates and do not reflect what is possible for every person. It is VERY important that anyone thinking about buying a home talk to a mortgage lender. Buyers need to determine their budget and max price BEFORE they start looking at homes.
Looking at homes BEFORE talking to a mortgage professional is putting the cart ahead of the horse!
The Fine Print: As always, I am providing this to you for informational purposes only! I am a REALTOR and blogger in Anderson SC and not a mortgage lender. You should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products. My suggestion is that ALL serious legitimate buyers take the first step and talk with a mortgage professional.