Like a scared stereotypical TV ‘50s housewife jumping on a chair to run from a mouse, mortgage rates have jumped higher this week — actually they’ve risen to the highest levels of the year. Rates seem a bit spooked because there was not a clear word on the Fed’s continued economic stimulation. Many thought the Fed “tapering” would be announced yesterday, but when it wasn’t, it left people startled. Surprises in the world of finance are rarely fun unless it’s the “I just found $20 in my jeans” type of surprise. For a more in-depth look on how the rates rose, here are the raw numbers from Freddie Mac:
30-year fixed-rate mortgage (FRM) averaged 4.58% with an average 0.8 point for the week ending August 22, 2013, up from last week when it averaged 4.40%. A year ago at this time, the 30-year FRM averaged 3.66%.
15-year FRM this week averaged 3.60% with an average 0.7 point, up from last week when it averaged 3.44%. A year ago at this time, the 15-year FRM averaged 2.89%.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.21% this week with an average 0.5 point, down from last week when it averaged 3.23%. A year ago, the 5-year ARM averaged 2.80%.
1-year Treasury-indexed ARM averaged 2.67% this week with an average 0.5 point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.66%.
For a closer look at the how and why of rising mortgage rates here’s an analysis done by Frank Nothaft, vice president and chief economist of Freddie Mac:
“Fixed mortgage rates continued to follow bond yields higher leading up to the August 21 release of the Federal Reserve monetary policy committee’s minutes for July. In its July 30 and 31 meetings, the committee members were broadly comfortable with a plan to start reducing its bond purchases later this year, although a few emphasized the importance of being patient.
“Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates. In fact, existing home sales increased in July to the strongest pace since November 2009 and homebuilder confidence in August rose to its highest reading since November 2005. Both increases occurred after mortgage rates had risen from their spring-time lows.”