Freddie Mac: Rates Rise to Highest Levels of Year

Interest rates continued to increase during the week ended June 11 according to results of Freddie Mac’s weekly Primary Mortgage Market Survey released this morning.  Three of the four average rates tracked by the survey were the highest of the current year.

According to the survey the 30-year fixed-rate mortgage (FRM) jumped to an average of 5.59 percent with 0.7 point.  One week ago the average rate was 5.29 percent with 0.7 point.  This is the highest average rate for the 30-year FRM since the week ended November 26, 2008 when it averaged 5.97 percent.

The 15-year FRM averaged 5.06 percent with an average 0.7 point, up from last week when it averaged 4.79 percent also with 0.7 point.  The last time the 15-year FRM was higher was the week ending December 11, 2008, when it was 5.20 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) jumped 32 basis points to 5.17 percent.  Fees and points were unchanged at 0.6 point.  This is the highest rate for the 5-year ARM since the week ended February 12, 2009, when it averaged 5.23 percent.

One-year Treasury-indexed ARMs had an average rate of 5.04 percent this week, up from last week when it averaged 4.81 percent.  Fees and points also increased from 0.6 point to 0.7 point.  The last time the 1-year ARM was higher was the week ending December 11, 2008, when the average was 5.09 percent

“Mortgage rates followed the increase in bond yields this week as the May employment report showed that the economy lost fewer jobs than the market consensus had expected,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Revisions to the jobs report for earlier months also showed the job loss was not as large as early estimates had indicated: March and April figures were revised to add an additional 82,000 jobs to the work force.  As a result, federal funds futures rose after the report, signaling that the market expects the Federal Reserve may raise its benchmark rate sooner rather than later.

“Higher mortgage rates are slowing refinancing activity but not demand for home purchases.  Over the three-weeks ending June 5th, interest rates for 30-year fixed-rate mortgages rose nearly one-half of a percentage point.  As a result, conventional mortgage applications for refinance fell each week during this period while applications for home purchases consecutively rose, according to the Mortgage Bankers Association.”

Fannie Mae’s weekly yields for the week ended June 5 were also higher.  The 30-year FRM increased from 5.02 to 5.17 and the 15-year FRM went from 4.42 to 4.57.  Government guaranteed 30-year FRMs through FHA and the VA rose to 5.92 from 5.88.  The one-year ARM was up five basis points to 3.53.

Fannie Mae yields are quoted on a net basis and do not include servicing fees.