Freddie Mac Survey: Rates Take Big Jump

After months of low rates some of which broke long-time records, mortgage interest rates shot up drastically during the week ended June 4.

Freddie Mac released the results of its Primary Mortgage Market survey this morning, showing that the 30-year fixed-rate mortgage (FRM) for the week averaged 5.29 percent with 0.7 point.  This is the highest rate for the 30-year FRM since the week ended December 18, 2008 when the average was 5.19 percent.  The new number is an increase of 37 basis points over last week's average 4.91 percent with 0.7 point.

The 15-year FRM increased 25 basis points from the previous week to average 4.79 percent.  Fees and points were unchanged at 0.7.  The 15-year was last at these levels during the week ended February 12 when the average was 4.81 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was also up, but not as dramatically.  The average last week was 4.85 percent with 0.6 point compared to the previous week when it averaged 4.82 percent also with 0.6 point.

The one-year Treasury-indexed ARM jumped to 4.81 percent from 4.69 percent.  Fees and points remained at 0.6 point.

"30-year fixed-rate mortgage rates caught up to the recent rise in long-term bond yields this week to reach a 25-week high, " said Frank Nothaft, Freddie Mac vice president and chief economist. " And the slowdown in the housing market has now detracted from economic growth for the past 13 quarters, the longest quarterly stretch since at least 1947, according to the Bureau of Economic Analysis.  In the first quarter of 2009 alone, residential fixed investment shaved 1.4 percentage points off of real GDP growth, the most since third quarter of 2006.

"Yet, there are signs that the housing market may be moderating.  Housing affordability rose in April to the second highest reading since January 1971 when records began, according the National Association of Realtors® (NAR).  As a result, pending existing home sales rose for the third consecutive month by 6.7 percent in April and represented the largest monthly increase since October 2001.  Three of the four regions experienced increases, led by a 33 percent jump in the Northeast, the NAR reported."

There were also substantial increases in the weekly yields reported by Fannie Mae on Monday.  For the week ended May 29, the 30-year FRM increased from 4.49 percent to 5.02 percent.  The 15-year FRM averaged 4.42 percent compared with 4.04 percent a week earlier, and government guaranteed FHA/VA mortgages jumped from 5.34 percent to 5.88 percent. The one-year ARM increased only slightly from 3.42 percent to 3.48 percent.

All Fannie Mae yields are reported net of servicing fees.