Mortgage rates rise on employment, Fed headlines
Mortgage rates rose slightly with a stronger-than-expected jobs report starting the week and the Federal Open Market Committee decision to hold the line on short-term rates ending it, according to Freddie Mac.
"With Federal Reserve policy on cruise control and the economy continuing to grow at a steady pace, mortgage rates have stabilized as the market searches for direction," Sam Khater, Freddie Mac's chief economist, said in a press release. "The risk of an economic downturn has receded and, combined with the very strong job market, it should lead to a slightly higher rate environment."
The 30-year fixed-rate mortgage averaged 3.73% for the week ending Dec. 12, up from last week when it averaged 3.68 percent. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.63%.
The 15-year fixed-rate mortgage averaged 3.19%, up from last week when it averaged 3.14%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.07%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.36%, down from last week when it averaged 3.39%. A year ago at this time, the five-year adjustable-rate mortgage averaged 4.04%.
A separate rate tracker from Zillow had an eight basis point rise compared with the prior week for the 30-year fixed-rate mortgage on Dec. 11 to 3.76%.
"Mortgage rates were flat this week after responding only modestly to November's stellar jobs report. Employment figures as strong as Friday’s release would normally push rates upward much more strongly, but the labor market has been a bastion of strength for the economy for most of this year," said Zillow economist Matthew Speakman. "So while Friday's release exceeded consensus expectations, in many ways it merely reinforced the notion that the labor market remains on solid footing, leaving little reason for bond yields, and thus mortgage rates, to react strongly."
The most imminent driver of a large change in mortgage rates remains the trade dispute between the U.S. and China.
"In the absence of any meaningful developments in the talks, investors are forced to take all relevant data and news with a grain of salt in preparation for an update to the negotiations that could come at any time," Speakman said. "In the near term, markets will be keeping a very close eye on whether planned increases to tariffs on Chinese goods — due to take effect on Sunday — will be implemented, delayed or cancelled. A delay appears to be likely, but if the increases go through as planned mortgage rates would certainly take a sharp turn lower."