By Mike Colpitts
Mortgage rates couldn’t remain at their all-time record lows for long. Interest rates on fixed rate home loans saw a big jump to their highest level in weeks and most adjustable rate mortgages followed suit.
The big jump in rates may have caught some homeowners looking to refinance off-guard as the Fed purchases additional mortgage backed securities in efforts to keep pressure on rates moving lower, and stimulate the U.S. economy.
The fixed 30-year mortgage averaged 4.12% with an average of 0.8 point for the week ending today, up from 3.94% last week, the lowest rate the mortgage has hit in the history of the loan. A year ago the same mortgage was at 4.19%.
The fixed 15-year home loan averaged 3.37%, an increase from 3.26% a week ago. The jump in rates was heavily blamed on an employment report that showed better than expected conditions in the job market, despite nearly half of all jobs being added to the figure being for workers at Verizon telephone company returning to work from a strike.
The employment report acted to pressure U.S. Treasury bond rates, pushing them higher for investors looking for better returns. The 10-year benchmark bond rate reached 1.75% before moving higher to push interest rates higher.
“In addition, revisions to July and August figures added a total of 99,000 jobs to payrolls,” said Freddie Mac chief economist Frank Nothaft. “However these job gains are still not large enough to bring down the current unemployment rate of 9.1%.”
High joblessness and little government action to energize the job market offered by a divided Congress troubles the U.S. economy, which is just 13 months away from the next presidential election.
The 5-year Treasury indexed hybrid adjustable rate mortgage hit an average of 3.06%, also a big jump from 2.96% a week ago. The seldom used 1-year ARM monitored by the giant government lender, however, fell to an average of 2.90% on weak demand from 2.95% last week.