An increased employment rate had a corresponding effect on mortgage rates, causing the numbers to shoot up, the highest that has been experienced in almost eight years with the 30-year-fixed-rate.
Based on the data which was published by Freddie Mac, the 30-year fixed-rate average shot up to 4.94 percent with an average 0.5 point. (Points refer to fees which a lender charges equal to 1 percent of the loan amount). Just recently, it was 4.83 percent and 3.90 percent in the past year. The last time it reached this high was in February 2011 on a 30-year fixed.
The 15-year fixed-rate average went up to 4.33 percent along with an average 0.5 point. Just a week ago, it was 4.23 percent and 3.24 percent in the past year.
“The all-important read on the American labor market showed stronger-than-expected employment and wage growth, which gives the Federal Reserve yet another data point suggesting that the U.S. economy can withstand higher interest rates,” said Aaron Terrazas, senior economist at Zillow. “The upward momentum for rates is likely to continue in the near term.”
With the sudden hike in mortgage rates, the following tips will help you get the lowest rate.
The meeting held by the Federal Reserve comes to a close later today, and it’s very unlikely for them to raise their benchmark rate. Still it is highly possible for them to shoot up short-term rates in its meeting which would be held next month. This increase, when it happens would be the fourth one to have taken place this year. It is not the primary duty of the Central Bank to set mortgage rates, but its decisions has an impact on them.
According to Bankrate.com, a website that presents mortgage rate trend index on a weekly basis, some experts analyses showed that they were evenly split on the direction of the rates. One group claimed that the rates will experience a continuous increase in the coming week, while the other half do not expect any change at all.
Speculations by Greg McBride, chief financial analyst at Bankrate.com feels that the rates will experience an increase.
“No Fed rate hike this week but clear indications of another hike to come in December that will push bond yields and mortgage rates a bit higher,” McBride said.
Branch manager at Sierra Pacific Mortgage, predicts that rates will remain the same.
“With a lack of economic news or reports to move markets, I expect bond yields and mortgage rates to remain flat in the coming week,” Becker said.
In the face of a constant hike in rates, mortgage applications have experienced a decline based on the most recent data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – fell by 4 percent in the previous week. The refinance index declined by 3 percent a week earlier. At the same time, the purchase index fell by 1 percent.
The refinance share of mortgage activity accounted for 39.1 percent of all applications.
“The steady rise in mortgage rates … continues to weigh on mortgage applications, as total volume fell last week to its lowest level since December 2014,” said Bob Broeksmit, MBA president and chief executive. “Even though purchase applications declined for the second straight week, mortgage lenders throughout the country say homebuyer demand is still strong. With home price growth moderating, inventory conditions improving and incomes rising, the foundation is there for activity to pick up before the end of the year.”
Also, the MBA put out its mortgage credit availability index (MCAI) this week which displayed an increase in credit availability in October, with the MCAI rising from 2.5 percent to 186.7 in the previous month. With this increase, it can be deduced that lending standards are loosening, and at the same time, decrease signals are tightening.
“Credit availability increased in October, driven largely by an expansion in the supply of conventional credit, while government credit fell slightly over the month,” Joel Kan, an MBA economist, said in a statement. “Reversing a trend from last month, lenders made more conventional and low down payment programs available to prospective borrowers. This increase in supply was likely in response to a growing number of first-time home buyers in the market. … Jumbo credit availability also expanded last month, with the jumbo index increasing again to its highest level since the survey began.”