Mortgage rates rise for the week of June 2, 2014

Posted by  on Jun 09, 2014

In what way are mortgage rates like Russian roulette? That's not a common sport, not least because participants tend to have tragically short playing careers, but, if you were ever to witness a game, you could make a fairly certain prediction: Sometime pretty soon, there's going to be a big bang. Of course, assuming the cylinder was spun after each go, the laws of probability would rule, and it's perfectly possible that a game could last much longer than you expect. But that wouldn't make your prediction wrong: Sometime pretty soon, there really is going to be a big bang.

There! Now you know what it's like watching mortgage rates: Everyone knows they're going to go up, but nobody knows when. And even a few weeks of small rises wouldn't necessarily mean -- to mix gun metaphors -- that the starting pistol had been fired and they were finally off on their long-term climb.

For the previous five weeks, they've fallen. This week, most have inched up. What happens next week is anyone's guess.

Mortgage rates in detail

According to HSH.com, data for weekending June 6, the average for all 30-year fixed-rate mortgages (FRMs) was 4.20 percent with 0.15 points, just one basis point up from the previous week's 4.19 percent with 0.12 points. You have to go back all but a year to find either of those rates lower.

Average rates for 15-year FRMs also rose by a similarly small amount to 3.41 percent from 3.40 percent the week before, while points also climbed to 0.11 from 0.09. Again, 3.40 percent is the lowest for 49 or 50 weeks.

At least some adjustable-rate mortgages (ARMs) bucked the trend over that period and actually fell. For example, the average for 30-year 1/1 ARMs dipped to 2.69 percent from 2.72 percent the previous week, with points also reduced to 0.11 from 0.13.

Our live database of current mortgage rates can help you find the best mortgage rates in your area.

Why home loan rates are unpredictable

You may conclude that mortgage rates are unpredictable because most economists are fools. This might be a sensible, evidence-based conclusion based on observation over the last decade. But there are other reasons.

During periods of economic and political stability in the world, investors are willing to take chances with their money, and -- with their low returns -- boring old mortgage and other bonds get more expensive as the supply of cash for them dries up. But when there's a lot of uncertainty around (President Putin requesting that Ukraine kindly moves its borders away from his troops, say, or, as happened last week, the European Central Bank reducing its deposit rate for banks from zero to -0.1 percent -- a negative interest rate!) those investors tend to look for safe havens for their assets. Top of the pile of these are U.S. Treasury bonds, with mortgages not far behind. And this drives borrower rates lower.

With so many unknown variables, you can see why even clever economists struggle to accurately predict rate changes. All we know for sure is that today's rates for home loans remain extremely low by historical standards, and that they're pretty certain to significantly rise sometime quite soon.

Gambling on postponing finding your best mortgage or refinance deal in the hope they fall further, may prove you have nerves of steel. But a game of Russian roulette is not the best way to approach your budget!

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