The latest Primary Mortagage Market Survey (PMMS) released by Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) showed that the fixed mortgage rates went up slightly this week, which was primarily driven by better-than-expected jobs report—an indication that the labor market continues to improve.
Freddie Mac’s Mortgage rates
The PMMS survey showed that lenders are offering an average of 4.15% for a 30-year fixed rate mortgage (FRM) during the week ending July 10, 2014. The rate increased by 0.7% from 4.12% average rate last week. During the same week a year earlier, the average 30-year FRM was 4.5%.
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The average rate for the15-year FRM for the week was 3.24%, an increase of 0.6% from $3.22% a week earlier. During the same period last year, the average 15-year FRM was 3.53%.
The 5-year Treasury-indexed hybrid adjustable –rate mortgage (ARM) was 2.99% for the week, up by 0.4% fro, 2.98% last week. The average 5-year ARM was 3.26% last year.
The1-year Treasury-indexed ARM increased 0.4% from 2.38% to 2.40 this. During the same time a year earlier, the average 1-year ARM was higher at 2.66%.
U.S. labor market
Last week the Department of Labor reported that that the economy of the United States added 288,000 jobs in June, and the unemployment rate declined from 6.3% in May to 6.1%. The number of long-term unemployed (those jobless for 27 weeks or more) dropped by 293,000 to 3.1 million.
According to Frank Nothaft, vice president and chief economist at Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), the improvement in the labor market pushed mortgage rates higher this week.
Yesterday, the stock markets rallied after suffering a two-day decline as investors’ optimism regarding corporate earnings and the improvement of labor market reduced concerns regarding forecasts that the Federal Reserve would increase interest rates earlier than expected.
Joe Bell, senior equity analyst at Schaeffer’s Investment Research, opined that the downward movement of the stock markets was typical. He said, “We saw a knee-jerk reaction down, but we usually get some short-term volatility after events like these [jobs report]. A lot of people are viewing the fact that the Fed is going to continue to be accommodative to the economy.”