Mortgage Interest Rates Steered Away From Record Lows
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UPDATED: May 9, 2013
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Mortgage interest rates increased and moved away from record lows this week according to rate reports provided by loans.org.
Mortgage interest rates have finally turned around despite heading in a general downward direction for over a month.
For the week ending May 9, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.38 percent, an increase from last week’s rate of 3.33 percent.
The 15-year FRM averaged 2.56 percent. This rate is slightly up from last week when it averaged 2.54 percent.
Finally, the 5/1 adjustable-rate mortgage (ARM) interest rate averaged 2.3 percent, an increase from 2.26 percent set last week.
Deborah Bernat, senior associate at Hammond Residential Real Estate, said it is a good time to buy with acquisition financing and because of the low mortgage rates.
“I encourage my clients to think about their long term plans,” Bernat said. “It makes sense for many of my clients to purchase properties that will meet their needs for the next twenty years versus the next ten years.”
The housing market was strengthened by several outside factors, but the main contribution was the strong employment report in April.
According to the Bureau of Labor Statistics, around 165,000 new net jobs were gained by the economy during April. The addition was more than the market consensus forecast and the largest monthly increase during 2013.
Due to revisions, 114,000 more jobs were added to reports for February and March. New jobs and revisions forced the unemployment rate to fall to 7.5 percent in April, making it the lowest rate since December 2008.
Keith Newcomb, portfolio manager for Full Life Financial, said market participants react to trends in employment, inflation expectations and rate expectations, in addition to expected returns that are relative to other investments in the fixed income space.
Newcomb said that typically when stocks are down, bonds are up and interest rates are lower.
“Mortgages are spread products, so they follow,” he said.