Higher average mortgage rates should not affect purchase market
The increase in average mortgage rates this week should not affect the spring home purchase market because other factors remain strong, according to Freddie Mac.
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The 30-year fixed-rate mortgage averaged 4.41% for the week ending March 7, up from last week when it averaged 4.35%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.46%.
Mortgage rates "remain below year-ago levels for the fourth week in a row," said Freddie Mac Chief Economist Sam Khater in a press release. "In late 2018, mortgage rates rose over a full percentage point from the prior year, which was one of the main reasons that weakness in home sales continued into early 2019. However, the impact of recent lower rates and a strong labor market has led to a rise in purchase mortgage demand as we start the spring home buying season."
Last week's release of the fourth-quarter gross domestic product exceeded market expectations, plus a strong reading of the Chicago PMI — a closely watched indicator of manufacturing business activity — reached its highest level in more than a year, Matthew Speakman, an economic analyst at Zillow, said when that company released its rate tracker.
"Taken together, the releases offered evidence that the economy remains on good, if not strong, footing and prompted yields to trend higher for the better part of two days. Since then, however, this enthusiasm has tapered. Mixed messages on the advancements of U.S./China trade negotiations have resulted in only mild rate fluctuations as markets await more definite signals from the meetings."
The 15-year fixed-rate mortgage this week averaged 3.83%, up from last week when it averaged 3.77%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.94%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.87% with an average 0.3 point, up from last week when it averaged 3.84%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.63%.
"Looking ahead, the focus shifts to Friday's all-important employment report," Speakman said. "Wednesday's release of private sector jobs figures came in near expectations, suggesting that job growth remains solid, despite a modest slowdown. If Friday's report suggests the same or better, more upward movements in mortgage rates could be on the way."