Whew! Mortgage interest rates settle down after a two-week jump

whew

Mortgage interest rates may have reversed course on their recent upward moves.

That’s due to economic growth that’s not strong and steady enough to continue upward pressure on interest rates – yet.

For example, there was some mixed news from the jobs sector last week, according to John R. Thomas, branch manager of Primary Residential Mortgage in Newark, DE.

“The bad news was only 157,00 jobs were added in January 2013, that was below expectations, compared to 275,000 a year ago. And the unemployment rate ticked up from 7.8 percent to 7.9 percent in January this year,” Thomas said.

It’s the kind of economic news that can put downward pressure on mortgage rates.

After rising for two weeks, the average rate on the 30-year fixed-rate mortgage (FRM) came in the week ending Feb. 7, unchanged from last week at 3.53 percent, with an average 0.8 point, according to Freddie Mac’s weekly Primary Mortgage Market Survey. A year ago, it averaged 3.87 percent.

The average interest rate on the 15-year FRM was 2.77 percent, with an average 0.7 point, down from last week’s 2.81 percent. A year ago, the 15-year FRM averaged 3.16 percent.

Also putting downward pressure on interest rates was the Gross Domestic Product for the fourth quarter 2012. It came in down 2 percent from the third quarter in 2012.

Keith Gumbinger, vice president of HSH.com said, “There’s nothing at the moment that suggests a continuing rise for mortgage rates. Even if the negative initial reading for GDP during the fourth quarter of 2012 can be disregarded, we are at best still in a slow-growth pattern with little forward momentum.”

“Couple this with current Federal Reserve policy to keep mortgage rates low and plenty of fiscal challenges yet to be addressed, and it seems unlikely that rates can go much higher that what we have presently,” Gumbinger added.

For the 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM), the average interest rate was 2.63 percent, with an average 0.6 point, also down from last week when it averaged 2.70 percent, and down from the average 2.83 percent a year ago.

Finally, for the week ending Feb. 7, Freddie Mac reported the 1-year Treasury-indexed ARM averaged 2.53 percent, with an average 0.4 point, down from 2.59 percent last week, and down from 2.78 percent a year ago.

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