When employment reports show an improvement in the labor picture, it tends to have an effect on mortgage rates since the implication is that more people will have income to buy homes. As a result, when various economic data reports were released this morning, mortgage rates for January 24, 2013, jumped in response to the better job market news. This increase again turned around the flattening that occurred at the end of last week after the pop that occurred in rate averages January 17. Because the jobless claims report from the federal government showed a decline in unemployment filings, the market responded accordingly, moving back into the 3.5 percent neighborhood.
Interestingly, the mortgage-backed securities market took a drop in interest on today’s news. One would expect that those would increase as well as potentially more mortgages are written producing more returns. In reality, however, the increase in activity could potentially flood the market with more securities, dropping demand for them.
Lenders looked at the day’s activity as good market response signaling better profits down the road for loan originators. The potential rise fluttering is also causing an increase in activity among consumers who are feeling pressured to beat the clock before rates rise further and go back to 4 percent possibly. That said, the up and down of the rate-setting is also causing momentary gaps where loan officers can jump in and lock a rate for a customer that 60 minutes later doesn’t exist. So fluctuations continue to cause related ripple effects that are good and bad. Long story short, however, rate shoppers should consider themselves put on warning that the end is probably coming soon for low-end bargains in home loans.
The 30-year fixed rate averages sit on the high end between 3.375 percent and 3.5 percent with the majority on the 3.5 side of the spectrum. The comparable 15-year fixed mortgage also inched up to a range of 2.75 percent to 2.875 percent. Five-year adjustable rate mortgages are still lower at 2.625 percent to 3.25 percent.
Future forecasts are generally in agreement at the moment that the rate average trend is going to continue moving upward with momentary burps and stumbles. If the weak economy recovery continues to stay on an improvement track, mortgage rates will follow in their own way as well. The debt-ceiling risk from Washington D.C. has also been abated for now as Congress is pushing legislation to move the debate to May 2013, which also improves the picture.