U.S mortgage rates took a wild leap in the week ending 11th October, with the 30-year fixed mortgage rate surging by 19 basis points to 4.90%, the highest level since 14th April 2011, according to Freddie Mac’s latest weekly report.
The weekly jump certainly brought mortgage rates back in line with the upward trend in U.S 10-year Treasury yields, last week’s hold on rates an anomaly when considering the 7-year highs in Treasury yields through the week.
This week’s mortgage rate moves certainly compensated for last week’s muted response, with economic data released through to Thursday’s close being on the lighter side and ultimately having little to no impact on Treasury yields and the direction of mortgage rates for that matter.
Key stats through the week were limited to September wholesale and consumer price inflation figures, along with the weekly jobless claims numbers, softer annual inflation rates providing mortgage rates from little shelter from the ongoing move towards 5%.
Outside of the numbers, a glowing review of the U.S economy by FED Chair Powell contributed to the jump in Treasury yields, the view on the U.S economy supporting the more hawkish FOMC rate path projections that see rate hikes continuing through December and next year.
FED Chair Powell’s comments came in spite of market volatility, with rising tensions between the U.S and China and the IMF’s latest growth forecast downgrades for this year and next seemingly having little influence as the U.S economy powers ahead.
If there were concerns previously over affordability, the latest jump in mortgage rates, coupled with falling demand, attributed to higher rates and rising home prices, will certainly turn the screw for prospective home buyers and that not going to be a good thing for the housing sector, which is considered to be a barometer of the U.S economy. Debate of the real estate sector has garnered more airtime, though by historical standards, the current mortgage rate environment is less of an issue, the lack of wage growth and inventories being of greater concern.
Freddie Mac weekly average rates for new mortgages as of 11th October were quoted to be:
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30-year fixed rate loan jumped from 4.71% to 4.90% in the week, while up from 3.91% a year ago. The average fee rose from 0.4 points to 0.5 points.
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15-year fixed rates increased from 4.15% to 4.29% in the week, while up from 3.21% from a year ago. The average fee increased from 0.4 points to 0.5 points.
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5-year fixed rates increased from 4.01% to 4.07% in the week and up from last year’s 3.16%. The average fee held steady at 0.3 points.