dFreddie Mac, short for the Federal Home Loan Mortgage Corporation (FHLMC), reported a jump in average mortgages for the week.
dFreddie Mac, short for the Federal Home Loan Mortgage Corporation (FHLMC), reported a jump in average mortgages for the week. According to the weekly survey the agency conducted among lenders and borrowers, the average 30-year fixed rate mortgage increased sharply from 3.52% last week to 3.63% this week. The last time average 30-year fixed interest rates reached this level was in August last year.
As for the 15-year fixed rate loan, the average mortgage rate rose from 2.76% last week to 2.79% this week. This is lower compared to the average 15-year fixed rate of 3.16% during the same week a year ago.
For the ARM (adjustable rate mortgage) loans, the average 5/1 ARM rate is at 2.61% this week, down from the 2.63% average rate recorded during the previous week. One-year Treasury-index ARM loan rates increased slightly from an average of 2.63% last week to 2.64% this week, lower than the 2.79% average rate reported during the same week last year.
These mortgage interest rate increases follow stronger than expected U.S. economic data released over the past few days. Last Friday, the U.S. reported a higher than estimated increase in hiring as the non-farm payrolls report printed a 236K figure and showed that the jobless rate fell from 7.9% to 7.7% in February. This was succeeded by an upbeat retail sales report released this week, which revealed that consumer spending rose by 1.1% in February, more than twice as much as the estimated 0.5% increase. This prompted lenders to speculate about higher interest rates in the future as good economic data could convince the Federal Reserve to withdraw some of its monetary stimulus.
Freddie Mac’s weekly survey also revealed that borrowers are willing to pay 0.8% of the total loan amount in upfront fees to the lender.
If the U.S. economy continues to print strong data in the coming weeks, it could add to speculations of tighter monetary policy and interest rate hikes, which might end up dampening demand for home loans.