Mortgage rates rise on favorable economic news
Mortgage rates increased slightly this week as indicators point to an economic revival, including increased home sales activity, according to Freddie Mac.
"While the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery," Sam Khater, Freddie Mac's chief economist, said in a press release.
"While homebuyer demand is up and has been broad-based across most geographies, supply has been slower to improve. In fact, the gap between supply and demand has widened even further than the large gap that existed prior to the pandemic."
The 30-year fixed-rate mortgage averaged 3.18% for the week ending June 4, up from last week when it averaged 3.15%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.82%.
The 15-year fixed-rate mortgage averaged 2.62%, unchanged from last week. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.28%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.1% with an average 0.4 point, down from last week when it averaged 3.13%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.52%.
The higher rates came as economic reports last week exceeded consensus expectations, added Zillow economist Matthew Speakman when that company released its own rate tracker Wednesday evening.
"After a lingering disconnect, Treasury yields and mortgage rates have recently rekindled their relationship and resumed moving in tandem, thanks in part to enduring stability in the broader financial markets. As a result, after Treasury yields rose in recent days in response to some favorable reports on the labor market, service sector and factory orders, mortgage rates did the same," Speakman said.
"As reports continue to emerge that show the economy may be beginning a modest recovery, suddenly there appears to be upward pressure on bond yields, and thus mortgage rates. To be sure, rates remain near their lowest levels on record, but after weeks of wondering why rates weren’t even lower, the paradigm appears to be shifting. Altogether, this results in a greater emphasis being placed on Friday's May employment report. If the reading validates the better-than-expected private payrolls numbers released on Wednesday, then look for rates to begin moving upward in response," Speakman said.