While mortgage rates dropped back a little last week, breaking the pattern of rising rates for the first time in weeks, the report that 195,000 new jobs were created in June, coupled with upward revisions for employment in April and May is likely to lead to an increase in rates in the coming days.
According to HSH.com, last week the overall average rate for a 30-year fixed-rate home loan declined by 7 basis points (0.7 percent) to 4.55 percent. Average rates for 15-year fixed-rate mortgage loans also declined by 7 basis points (0.7 percent) to 3.66 percent. FHA-insured, 30-year fixed-rate home loan rates declined by just 1 basis point (0.01 percent) to an average rate of 4.29 percent. The average rate for a 5/1 Hybrid Adjustable Rate Mortgage (ARM), the only loan product to increase last week, rose by just 1 basis point (0.01 percent) to an average rate of 3.35 percent. Compare mortgage rates for your area before refinancing or applying for a purchase loan.
The July 5 jobs report wasn't perfect, but it was better than expected and demonstrated a solid three months of improving employment conditions. As a result, by the end of the day on Friday, the 10-year Treasury yield, which heavily influences mortgage rates, had risen by 20 basis points. The Federal Reserve has said it will begin to wind down its program of buying Treasuries and mortgage-backed securities once the unemployment rate reaches 7 percent; but even with last week's improved jobs report, unemployment remains at 7.6 percent.
Anticipation of when the Fed will make its move adds to market volatility. This week, the minutes of the last Fed meeting will be released, which should add to speculation about the impending end of QE3. The mortgage experts at HSH.com anticipate that mortgage rates will rise again by 10 to 15 basis points this week.
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