Highest mortgage rates since July 2011

Below is an excerpt from of our latest Market Trends newsletter, Keith Gumbinger’s weekly examination of the economic conditions that influenced mortgage rates. Sign up to receive the Market Trends in your inbox Friday evening.

The headlines were full of “mortgage rates jump” stories last week as volatility in the market continued. While true, most of the upward bump in mortgage rates came early in the week, things flattened out and perhaps even eased a little over the last few days of the week.

Regardless, there is little suggestion to be seen anywhere that we’ll find any substantial or lasting downturn in mortgage rates anytime soon.

Highest rates since July 2011

HSH.com’s broad-market mortgage tracker–our weekly Fixed-Rate Mortgage Indicator–found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) jumped by fifteen basis points (0.15 percent) to 4.70 percent, the highest level since July 2011.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) rose by a lesser 11 basis points (0.11 percent), landing at 3.77 percent for the week.


FHA-backed 30-year fixed-rate mortgages sported a rise of some 18 basis points, leaping to an average 4.38 percent.

The overall 5/1 Hybrid ARM wasn’t insulated from an increase, rising by twelve one-hundredths of a percentage point (0.12 percent) to 3.47 percent.

Where do we stand at the moment?

A modest-to-moderately growing economy with little inflation–in the context of the global economy–with plenty of evident softness and a lot of considerable headwinds.

To that, we’ve added a full percentage point to long-term interest and mortgage rates, and it is yet to be seen how this will impact the strength of the economy.

The impact of rising rates

Mortgage applications have been falling for a number of weeks, with refinances impacted of course more than purchases, but purchases are slipping as well. It will be a month or more until we see the full effect of mortgage rate increases, and the prospect for higher rates is stronger than lower ones in the interim.

A busier calendar of new data is out this week, including reports from the National Association of Homebuilders and another covering residential construction outlays. We’ll see if the rise in mortgage rates has had any impact on builder sentiment, sales or traffic patterns. We’ll also get the Fed’s own regional survey of economic conditions, Consumer Price Index, Leading Economic Indicators, retail sales and more.

Our prediction for this week

Even after a couple of whipsaw weeks for mortgage rates, there’s plenty of reason to expect continued volatility. Our best guess for this week at this point is a slight easing, possibly five basis points or so, but a wider swing in either direction wouldn’t surprise us at all.

With this in mind, it might be a good idea to check HSH.com for daily updates to see how things are going.

For a longer-range outlook for rates and the economy, one which will take you up until early August, have a look at our new Two-Month Forecast.

HSH Associates Financial News Blog

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