Fixed Rates Rise on Stronger Jobs Report

Fixed Rates Rise on Stronger Jobs Report

03/14/2013 BY: TORY BARRINGER

Unexpectedly positive employment and spending data drove mortgage rates to their highest level since August in the last week, according to reports from Freddie Mac and Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey showed the average interest rate for a 30-year fixed-rate mortgage (FRM) rose to 3.63 percent (0.8 point) for the week ending March 14, up from 3.52 percent last week. According to the GSE’s data, the last time the 30-year rate was this high was the week of August 23, 2012.

Last year at this time, the 30-year FRM averaged 3.92 percent.

The 15-year FRM this week averaged 2.79 percent (0.8 point), up from 2.76 percent previously.

Movements in adjustable rates were mixed. The 5-year adjustable-rate mortgage (ARM) averaged 2.61 percent (0.6 point), making it the only measure to see a decline (last week’s average was 2.63 percent). The 1-year ARMaveraged 2.64 percent (0.4 point), up from 2.63 percent.

“Fixed mortgage rates rose this week on stronger signs of jobs growth and consumer spending,” said Frank Nothaft, VP and chief economist for Freddie Mac. “The economy added 236,000 new workers in February which helped push down the unemployment rate to 7.7 percent. This helped offset the effects of the payroll tax holiday expiration and led to a 1.1 percent increase in retail sales, which was well above the market consensus forecast.”

Bankrate reported even more dramatic shifts this week, with the 30-year fixed average climbing 12 basis points to 3.85 percent, the 15-year fixed moving up 7 basis points to 3.03 percent, and the 5/1 ARM rocketing 14 points to 2.82 percent.

“Mortgage rates jumped to a 7-month high following a report of robust job growth and encouraging economic data on business investment and retail sales. The benchmark 30-year fixed mortgage rate, now at 3.85 percent, is the highest since it was 3.91 percent on Aug. 22, 2012,” Bankrate said in a release. “Positive economic news leads to higher bond yields, as evidenced by the 10-year Treasury note climbing back above the 2 percent threshold.”

For the next week, 55 percent of panelists surveyed by Bankrate expect rates will continue to climb. How long that momentum will continue, however, is anybody’s guess.

“Mortgage rates are notching higher following last week’s employment report, and the trend may continue a while longer,” said Greg McBride, CFA, senior financial analyst for Bankrate. “But a pullback in the stock market is inevitable and will lead to lower bond yields and mortgage rates when it happens.”

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