As of Thursday, January 31, mortgage rate averages dropped back from their highs earlier in the week to settle a little bit. The job report revision that came out Friday morning from the federal government is expected to provide a strong floor to keep the rates stable or help them increase further, especially given the fact that the number of new jobs created turned out to be higher than the original report release in December. As a result, the benchmark of the 30-year fixed mortgage loan on Thursday stayed slightly above 3.5 percent with the best options generally available at 3.65 percent for most consumers this week. Friday morning, some lenders were offering rates as high as 3.76 percent to 3.88 percent on a 30-year loan and 3.10 on a 15-year version.
The Federal Reserve helped matters this week voting 11 to 1 to keep interest rates of the Reserve low versus an increase, avoiding any kind of cost reaction in the markets. The federal government’s approach is still well based in the view that the economy still needs time to strengthen before any interest rate action should be taken.
For those in the mortgage backed securities bond world, it looks like the music is getting close to ending. As various interest rates rise, bonds begin to become less and less of an investment haven. Not surprisingly, money has been shifting out of the bond market in general and back into the stock market. More is expected as mortgage rates begin to climb. However, the Federal Reserve’s hold on any increase in their system remains the bulwark versus a run on bonds altogether.
Lenders are looking at Thursday’s activity and expecting an ongoing stabilization and rise in lending income from increased rate levels. Because the job report revision was so far off from the original estimate, noting a 50 percent increase in job creation originally report, it’s very likely ongoing rate averages are going to increase. Friday’s later activity will likely show a spike in response. As a result, lenders are continuing to advice consumers to lock rates in now as next week could be significantly higher in terms of borrowing costs. Anyone staying on the sidelines to hold out for a better position is being seen as somewhat naïve.
Thursday’s rate closed with, as mentioned above, the 30-year fixed mortgage average at 3.625 percent and the 15-year counterpart between 2.875 percent and 3 percent. The alternative 5-year ARM sits a bit lower between 2.625 percent and as much as 3.25 percent.
