After showing repeated decreases for several weeks, mortgage records last week saw the increase of interest rate averages nationwide.
In its Primary Mortgage Market Survey for the week ending May 3, Freddie Mac reported that popular fixed-rate mortgages (FRMs) exhibited substantial rises, while mixed movement was seen among adjustable-rate mortgages (ARMs).
Average 30-year FRMs were noted at 3.42 percent recently, moving up from the preceding week's reading of 3.35 percent. Meanwhile, 15-year FRMs averaged 2.61 percent last week, having hiked from the level of 2.56 percent observed the week prior. Although increases were seen on a week-over-week basis, significant year-over-year improvement is still apparent for both lending products, as 30-year and 15-year FRMs were recorded at 3.83 and 3.05 percent, respectively, during the same time period in May 2012.
Freddie Mac vice president and chief economist Frank Nothaft said the recent increase in mortgage rate averages could be an indication of the strengthening national economy, as a number of new jobs were added to the labor market last month.
"Fixed mortgage rates edged up following a solid employment report for April," said Nothaft. "The economy gained 165,000 new jobs on net last month, more than the market consensus forecast and the largest monthly increase this year. On top of that, revisions added 114,000 more jobs to February and March as well. All of these factors allowed the unemployment rate to fall to 7.5 percent in April, the lowest since December 2008."
Five-year treasury-indexed hybrid ARMs averaged 2.53 percent last week, ticking upward from the 2.56 percent noted the previous week. Amid the widespread increases, one-year treasury-indexed hybrid ARMs actually showed a decrease during the recent period, declining to 2.53 percent from its former position at 2.56 percent. Both products are in better position on an annual basis, however, as five-year ARMs are seen at 2.81 percent and one-year ARMs averaged 2.73 percent during the same week last year.
Mortgage rates may only be seen increasing in coming months
While consumers nationwide may have enjoyed being able to lock in affordable home loans due to advantageous rate averages, the recent increase may again be observed in the following weeks and months. According to Yahoo Homes, industry professionals believe that the ever-popular 30-year FRM product may see its rates tick up to more than 4 percent by year's end.
This could be due to the bolstering state of the national economy, as more consumers are finding themselves able to obtain financing, and lending companies feel an increased sense of safety and soundness in their dealings.