A Healthier Economy Sparks Rises in Mortgage Rates
Freddie Mac released its weekly update on national mortgage rates Thursday morning, showing sharp spikes in rates nearly across the board.
Thirty-year fixed-rate mortgages (FRMs) spiked 19 basis points over the past week, rising to 4.35%, with 15-year FRMs up eight basis points to 3.35%. In each case, rates are back to levels last seen in September. A year ago at this time, the 30-year FRM averaged 3.34%, while the 15-year FRM averaged 2.65%.
Adjustable-rate mortgage (ARMs) tread divergent paths over the past week, with 5/1 ARMs tacking on five basis points to reach 3.01%, but one-year ARMs holding steady at 2.61%. A year ago, these rates averaged 2.74% and 2.55%, respectively.
Commenting on the numbers, Freddie Mac Vice President and Chief Economist Frank Nothaft cited "stronger than expected economic data releases." The most recent payroll report on nonfarm jobs showed a rise of 204,000 in October, higher than forecast. Revisions to jobs reports for previous months, as new, more accurate data were added, also showed that jobs growth was stronger than previously thought in each of August and September. Finally, Nothaft noted that real GDP growth in the economy's third quarter was 2.8%, and also above consensus.
Such signs of a strengthening economy, especially in the light of last month's government shutdown, which had been expected to -- but failed to -- slow things down, give the Federal Reserve more room to argue that it's safe to begin winding down the fiscal stimulus. If the Fed takes this path, interest rates would be expected to rise, and forward-looking mortgage rates are now reflecting that likelihood.
The article A Healthier Economy Sparks Rises in Mortgage Rates originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.