Mortgage rates jumped on Thursday at the fastest single-day pace since 2013 ahead of the release of November’s Non-Farm Payrolls report. Following a selloff in the bond market on Thursday, mortgage interest rates increased significantly, while equities gained. Many lenders updated their rate sheets with higher figures, so borrowers, who are looking for a new mortgage these days may see higher contract rates compared to rates earlier this week. The average lender is now offering current 30-year fixed mortgage rates in the range of 4.000% – 4.125%, with many of them favoring 4.125%.
As far as U.S. treasury bonds are concerned, the yield on the benchmark 30-year treasury note rose by 15 basis points to 2.33% on Thursday, which marks the biggest one-day increase in more than two years. The yield on the longer-term 30-year treasury bond finished the trading session at 3.07%, an increase of 16 basis points compared to Wednesday’s level. The bond market is a driving force behind mortgage rates and the 10-year note is a key factor when it comes to determining daily rate levels. Therefore, chances that now you will see some significant net changes in mortgage rates at your lender compared to levels from the beginning of the week.
This Friday morning, current mortgage rates are slightly lower, as pricing on mortgage-backed securities (MBS) improved, following a loss earlier today. November’s Non-Farm Payrolls report came in above expectations, which most likely will pave the way for the Fed to lift rates in December, for the first time in almost a decade. More details on the NFP report and the topic of rate hike later in this report.
Now, switching to national mortgage rates, McLean, VA-based government-sponsored enterprise Freddie Mac reported on Thursday, that the average rate on the 30-year fixed mortgage dropped to 3.93% this week. This translates to a 2 basis points downtick compared to data from a week earlier, according to Freddie Mac’s latest Primary Mortgage Market Survey (PMMS). The average rate on the 30-year fixed mortgage has been on a downward trajectory for three consecutive weeks now. The same time a year ago, the 30-year fixed loan averaged a rate of 3.89%. Moving on to the 15-year fixed mortgage, the national average rate on this type of loan slipped 2 basis points to 3.18% this week, the mortgage-buyer’s survey showed. Back in 2014, the 15-year FRM averaged a rate of 3.10%.
Interest rates on adjustable-rate mortgages were mixed this week, the federal agency’s PMMS survey showed. Currently, the average rate on the 5-year ARM is hovering at 2.99%, down from the previous 3.01% it carried in the prior week. Last year, this type of flexible mortgage averaged a rate of 2.94%. With regards to the 1-year ARM, it came in at 2.61% this week, a slight uptick from the previous 2.59% it had a week earlier. The same time a year earlier, the 1-year adjustable-rate mortgage averaged a rate of 2.41%.
Now, coming back to today’s economic data, the all-important jobs data for November got released earlier this morning, which revealed that the economy added 211,000 jobs this month, a better figure compared to the consensus expectation of 190,000 jobs. The report also revealed that the unemployment rate remained at 5.0%, matching expectations. Wages increased by 0.2% in November and average hourly earnings are now 2.3% higher than a year earlier, according to the Labor Department’s report. All in all, the jobs report signals a strong and healthy labor market, and the latest data will most likely encourage U.S. policymakers to lift rates at the upcoming FOMC meeting in December. According to the CME FedWatch tool, the market is now pricing in a 79% chance of a rate hike to take place this month.
Fed Chairwoman Janet Yellen gave the congress an upbeat view on the U.S. economy on Thursday, saying that the current economic outlook and the flow of data since the last FOMC meeting in October are consistent with the central bank’s rate hike criteria. Economists expect a 25 basis points rate hike to take place this month, with further, gradual hikes to happen sometime in 2016.
As we mentioned in today’s mortgage report the current average rate on the 30-year fixed mortgage rate is now 3.93%, according to Freddie Mac’s data. However, if the Fed decides to hike in December, chances that interest rates on such type of long-term mortgages will rise as well. So if you’re looking to get a mortgage in the near future in order to buy a new or used home or to refinance an existing loan, we advise you to lock a rate sooner rather than later, until rates are still low.
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