Lower Unemployment Means (Slightly) Higher Mortgage Rates
Freddie Mac released its weekly update on national mortgage rates on Thursday morning, showing mortgage rates beginning to inch back up again after nearly a month of flat to declining rates: 30-year fixed-rate mortgages (FRMs) ticked up three basis points to 4.15%; 15-year FRMs gained two basis points, rising to 3.24%. One year ago, 30-year FRMs cost 4.51% and 15-years 3.53%.
Meanwhile, 5/1 adjustable-rate mortgages (ARMs) added a single basis point in the most recent week, rising to 2.99%, and 1-year ARMs added two basis points to land at 2.42%. A year ago, 5/1 ARMs were at 3.26% and 1-year ARMs at 2.66%.
Freddie Mac's vice president and chief economist, Frank Nothaft, pointed to improvements in the labor market as likely being behind the slight rise in rates, with last week's employment report showing "the U.S. economy added 288,000 jobs in June, gained 224,000 in May and increased by 304,000 in April." He also noted that the unemployment rate in June fell to 6.1% from 6.3% in May.
Lower unemployment is good news for homebuyers, home sellers, and mortgage lenders, as it tends to produce more paychecks that can be used to pay higher mortgage rates.
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