Mortgage Rates Increase as Labor Market Improves
Mortgage rates for 30-year loans rose for the first time in four weeks, increasing borrowing costs as job creation bolsters the housing recovery.
The average rate for a 30-year fixed mortgage was 4.15% this week, up from 4.12%, Freddie Mac said in a statement today. The average 15-year rate climbed 3.24% from 3.22%.
A better-than-expected jobs report last week pushed up yields for the government bonds that guide mortgage rates. The economy added 288,000 workers in June and the unemployment rate fell to an almost six-year low of 6.1%, Labor Department figures showed.
"The employment report was definitely good," Keith Gumbinger, vice president of HSH.com, a Riverdale, N.J.-based mortgage-data firm, said yesterday in a telephone interview. While solid economic news should be pushing mortgage costs even higher, the Federal Reserve "is still buying mortgage-backed securities and treasuries, both intended to keep rates low."
After a slow start to 2014, housing demand is gaining strength. Contracts to buy previously owned houses climbed 6.1% in May, the biggest monthly gain since April 2010, the National Association of Realtors said this week.
The Mortgage Bankers Association's index of purchase-loan applications rose 3.7% in the week through July 4, while the refinancing gauge climbed 0.4%, the trade group said yesterday.