National Mortgage Rates: 30-Year Fixed Mortgage Rate Surges to 3.69 Percent, Freddie Mac Says

After weeks of steady declines, mortgage interest rates were up significantly in the Freddie Mac Primary Mortgage Market Survey for the week ended February 12, 2015.

The average rate on 30-year fixed-rate mortgage loans, which was hovering at 3.59 percent the week prior, moved up ten basis points on Thursday, finishing the wraparound week at 3.69 percent. This interest rate is still far lower than the year-ago interest rate of 4.28 percent. 15-year fixed-rate loans, which came in at 2.92 percent in the previous week, added seven hundredths of a percentage point to 2.99 percent, which is 34 basis points lower than the previous year’s 3.33 percent average and still barely within the 3 percent threshold.

National Mortgage Rates

Five-year Treasury-indexed hybrid adjustable-rate mortgages appreciated quite notably, jumping 15 basis points from 2.82 percent to 2.97 percent, making last week’s rates just eight basis points lower than the previous year’s 3.05 percent. Lastly, one-year Treasury-indexed ARMs were up from 2.39 percent to 2.42 percent, or 13 basis points below last year’s 2.55 percent average.

The main driving factor for the rather large increase in mortgage rates was the employment report released on February 6 by the U.S. Bureau of Labor Statistics. According to the report, non-farm payroll employment had increased in January by about 257,000 jobs, a figure far higher than most Wall Street forecasts. The unemployment rate, on the other hand, did not change too much, coming in at 5.7 percent last month.

“Mortgage rates rose this week following strong economic data,” explained Freddie Mac deputy chief economist Leonard Kiefer. “The economy added 257,000 new jobs in January after robust increases of 329,000 in December and 423,000 in November. The unemployment rate edged up to 5.7 percent last month from 5.6 percent in December. Average hourly earnings rose 0.5 percent, following a 0.2 percent decline in December.”

In Bankrate’s weekly survey, which is also released every Thursday, similar trends were noted, as 30-year fixed-rate mortgages were also up by ten basis points, moving from 3.80 percent to 3.90 percent. 15-year FRMs increased by half of that, edging from 3.12 percent to 3.17 percent, while 5/1 ARMs also went up by over ten basis points, rising twelve hundredths of a percentage point from 3.20 percent to 3.32 percent. Likewise, Bankrate’s statement explaining the rate increases also singled out the U.S. employment report as the main variable that pushed rates upwards after weeks of trending downwards.

“Mortgage rates broke out this week after an extended period of calm, boosted by positive economic data and a surprisingly strong monthly employment report,” said Bankrate in a statement. “Job growth, in particular, has surged significantly in recent months, enough to bring forward expectations of a Federal Reserve interest rate hike to as early as the June 2015 meeting.”

Most financial experts believe that the Fed will be increasing its overnight borrowing rate by mid-2015 at the earliest, but prior to these developments, the consensus pointed to a rate hike happening later, rather than sooner in the year. But as Bankrate pointed out, all those job market improvements may be too much for the Fed to ignore as it plans to go about its inevitable interest rate hike.