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Welcome to the BeSmartee blog. Enjoy a wide selection of articles related to mortgages, the industry, and real estate.

Mortgage Rates on Upward Trend

By Amanda Curry · Jun 2, 2016 · Mortgage

Mortgage Rates on Upward Trend

Image courtesy of Flickr, 401kcalculator.org

Markets are adjusting to the idea of a Fed rate hike, Freddie Mac said.

Markets are adjusting to the idea of a Fed rate hike, Freddie Mac said. Jumping 11 basis points since May 18th, the 10 year Treasury yield has leveled off around 1.85 percent. Mortgage rates are continuing on a slow and steady climb, with the 30 year fixed rate inching up another 2 basis points this week to 3.66 percent.

Mortgage rates ending as of June 2, 2016

  • 30 year fixed rate mortgage from Freddie Mac averaged 3.66 percent with an average of 0.5 percent in fees for the week ending June 2, 2016, up from last week's 3.64 percent. A year ago at this time, the 30 year fixed rate mortgage averaged 3.87 percent.
  • 15 year fixed rate mortgage averaged 2.92 percent with an average 0.5 percent in fees, up from last week's 2.89 percent. A year ago at this time, the 15-year fixed rate mortgage averaged 3.08 percent.
  • 5 year adjustable rate mortgage averaged 2.88 percent this week with an average 0.5 percent in feed, up from last week's 2.87 percent. A year ago, the 5-year ARM averaged 2.96 percent.

30 year fixed

15 year fixed

5 year ARM

This week's rate

3.66

2.92

2.88

Fees and Points

0.5

0.5

0.5

Margin

N/A

N/A

2.74

Brexit A Concern

Undoubtedly, rate watchers are tuned into "Brexit,'' which could affect US mortgage rates. If Britain does in fact opt to leave the European Union, US mortgage rates might go lower. It may not seem like this could affect US mortgage rates, however, markets are interconnected. Having a strong, united European Union is important to the United States. In times of market turmoil, investors tend to go towards perceived safe investments. The US Treasuries are still considered a safety investment. As investors seek safe investments and money flows into Treasuries, prices will rise, as yield and mortgage rates drop.

Pending Home Sales Up

The National Association of Realtors reported that pending home sales have rose 5.1%, reaching their highest level in over a decade. The prospect of higher rates and home prices has been key in driving home sales.

Looking forward, National Association of Realtors' Chief Economist Lawrence Yun says that, "Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search."

Home Prices on the Rice

National home prices have been steadily climbing since March. According to the latest S&P/Case-Shiller Home Price Index, home prices grew by 5.2% in March from a year prior.

Falling unemployment rates, low mortgage rates, and improving labor markets are all factors that are helping homes to appreciate.

This Week's Economic Calendar: Jobs Report Released by BLS

The first Friday of every month marks the Bureau of Labor Statistic's employment report. Although rates are currently on the upward trend, this employment report has the potential to swing mortgage rates in the opposite direction. The Jobs Report details how many Americans are employed with "non-farm'' jobs, trends in various industries, income and hours worked. It is one of the United States' strongest economic indicators.

A strong Jobs Report, one that shows jobs added or wages increasing, may translate to wage inflation. The inflation tends to negatively impact bonds and may cause rates to trend higher. Conversely, the opposite holds true. A weak Jobs Report can cause mortgage rates to improve as investors flee to the safety of bonds.


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