The benchmark 30 Year Fixed Rate mortgage shot up to 4.580%. Rates that high have not been seen for nearly two years, as it was in June 2011 when the same rate was 4.600%. Even though the rate published this morning represents a new 2013 high, consumers should not panic as week over week, the rate increased just a tad over one-eighth basis points (.125%). The data is part of Freddie Mac's weekly rate survey comprised from lenders across the nation. It is an industry standard which has been used to communicate rate movement.
Favorable economic conditions
While the rates did increase, the past two weeks have been relatively flat. The Fed’s (Federal Reserve did indicate one reason why there was an increase was due to favorable economic trends. They have been buying bonds to keep long term rates in check. However, their strategy of buying bonds is being tamped down as the feeling is there is enough momentum to sustain consumer spending, which is one factor in determining the direction of mortgage rates.
The popular 15 Year Fixed Rate also increased and is currently at 3.600%. Rates are cyclical and trends are utilized for guidance, however for those consumers on the fence or deciding whether to purchase a home or refinance their existing mortgage, the news today could be motivation to complete a transaction. The reasoning is assuming rates move up further, there is no guarantee in securing the current positions, other than to make a commitment.
Complete rate report here.