As projected, following last week’s historic unemployment decline to 7.8%, the benchmark 30 year Fixed Rate Mortgage (FRM) edged up 3 points and is currently at 3.390%. Freddie Mac releases its weekly survey every Thursday. Even though it is a nationwide average, it is a good tool for consumers to gauge interest rates as well as determine how competitive local rates stack up.
Today’s increase halts the previous fifth straight weekly declines. The effect on mortgage payments or qualifying standard is minuscule, if any significance at all, but since rates are cyclical and movement is based on many variables, professionals were not surprised at the increase.
As we head towards the holiday season, positioning will remain critical as consumers decide whether to purchase a property or refinance their existing mortgage. Even though those on the West Coast, particularly in Southern California are seeing gas prices at record levels, overall based on national data, consumer confidence is slowing improvement and the next big test will be the October employment data slated to be released just before the national election on November 6th.
All eyes on October employment data
Should the data come in favorably signaling higher employment (or lower unemployment), the residual effect will result in higher interest rates? This is due because of all metrics; mortgage rates are also based on supply and demand. The more people employed, factored with an improved economy translates into more mortgage applications. On the other hand, the reverse would apply should the economy stall or there are people employed who are not motivated to commit to spending money, other than the basics.
Weekly Survey Data
• 30-year fixed-rate mortgage (FRM) averaged 3.39 percent with an average 0.7 point for the week ending October 11, 2012, up from last week when it averaged 3.36 percent. Last year at this time, the 30-year FRM averaged 4.12 percent.
• 15-year FRM this week averaged 2.70 percent with an average 0.6 point, up from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.37 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.73 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.06 percent.
• 1-year Treasury-indexed ARM averaged 2.59 percent this week with an average 0.4 point, up from last week when it averaged 2.57 percent. last week. At this time last year, the 1-year ARM averaged 2.90 percent.