Mortgage Rates Reach New Highs for 2015

The average fixed mortgage rates have reached new 2015 highs, according to Freddie Mac’s Primary Mortgage Market Survey (PMMS).

According to the survey, the 30-year fixed-rate mortgage (FRM) averaged 4.08 percent with an average 0.6 point for the week ending July 2, 2015. This is an increase from last week when it averaged 4.02 percent. The 30-year FRM averaged 4.12 percent a year ago at this time. The 15-year FRM this week averaged 3.24 percent with an average 0.6 point, up from last week when it averaged 3.21 percent. A year ago at this time, the 15-year FRM averaged 3.22 percent.

Freddie Mac also found that the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.99 percent this week with an average 0.4 point, an increase from last week's rate of 2.98 percent. The 5-year ARM averaged 2.98 percent a year ago. Meanwhile, the 1-year Treasury-indexed ARM averaged 2.52 percent this week with an average 0.3 point, up from last week when it averaged 2.50 percent. The 1-year ARM averaged 2.38 percent at this same time last year.

"Overseas events are generating significant day-to-day volatility in interest rates. Nonetheless, the week-to-week impact on most rates was modest—the 30-year mortgage rate increased just 6 bps, to 4.08 percent,” Sean Becketti, chief economist, Freddie Mac. “The MBA composite index of mortgage applications fell 4.7 percent in response to what is now three consecutive weeks of mortgage rates over 4 percent. Other measures, however, confirmed continued strength in housing—pending home sales rose 0.9 percent, exceeding expectations, and the Case-Shiller house price index recorded another solid increase."

The Bureau of Labor Statistics (BLS) also reported today that job gains totaled 223,000 in June as the unemployment rate dipped to 5.3 percent, according to their June 2015 Employment Situation. Doug Dunacan, SVP and Chief Economist at Fannie Mae noted how this report affected the construction sector and housing demand.

"The 0.2 percentage point decline in the unemployment rate to a seven-year low masks the bleak news that the labor force participation rate fell three-tenths to the lowest reading since October 1977," Duncan said. "Particularly disappointing was the unchanged construction payrolls figure, weighed down by the largest drop in residential construction employment in nearly five years. However, as housing demand is heating up amid lean inventories, boosting rents and home prices, we expect home building activity and residential construction employment to pick up. One concern is that builders may find it increasingly difficult to hire skilled workers without substantially raising wages, which are already increasing at a strong clip. We continue to see a bounce-back in second quarter economic growth, building momentum into the second half of the year, with housing acting as a tailwind."