Freddie Mac released the results of its Primary Mortgage Market Survey ® yesterday that shows fixed mortgage rates jumping significantly over the last week to the highest level in a year.
The average 30-year fixed rate moved up nearly half a percentage point since the beginning of the month to 3.81 percent from 3.35 percent average in early May. Mortgage rates remain near historic low levels, helping homebuyer affordability and should continue to aid home sales and construction as the housing market continue to recover.
Fixed rates and hybrid rates all increased along with the 1 year Treasury ARM:
- 30-year fixed-rate mortgage (FRM) averaged 3.81 percent with an average 0.8 point for the week ending May 30, 2013, up from last week when it averaged 3.59 percent. Last year at this time, the 30-year FRM averaged 3.75 percent.
- 15-year FRM this week averaged 2.98 percent with an average 0.7 point, up from last week when it averaged 2.77 percent. A year ago at this time, the 15-year FRM averaged 2.97 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.66 percent this week with an average 0.5 point, up from last week when it averaged 2.63 percent. A year ago, the 5-year ARM averaged 2.84 percent.
- 1-year Treasury-indexed ARM averaged 2.54 percent this week with an average 0.5 point, down from last week when it averaged 2.55 percent. At this time last year, the 1-year ARM averaged 2.75 percent.
According to Frank Nothaft, vice president and chief economist of Freddie Mac:
Fixed mortgage rates followed long-term government bond yields higher following a growing market sentiment that the Federal Reserve may lessen its accommodative policy stance. Improving economic data may have encouraged those views. For instance, the Conference Board reported that confidence among consumers rose in May to its highest level since February 2008. Meanwhile, the S&P/Case-Shiller® 20-city composite index for March rose to its highest reading since November 2008 (seasonally adjusted). All 20 cities had positive monthly gains, led by a 3.2 percent increase in Las Vegas.
The Freddie Mac regional breakdown shows the west and southeast tied with the lowest rate at 3.79 percent while the northeast, north central and southwest all reported in at 3.83 percent. Fifteen year fixed rates continue to be an excellent alternative with rates at or below 3.00 percent across the country. There is beginning to be more of a spread between the 30 year fixed and the 5 year hybrid ARM loans. These had been much closer in rate than they are currently, with more than a percent between them.
About the author: Fred Chamberlin was a senior loan officer with Guild Mortgage Company in Oak Harbor. He was in the mortgage origination business for over 20 years and in the lending business for over 30 and authors a number of mortgage related blogs.