Mortgage Rates Moving Back Up Near Their Highs for the Year

In the latest Freddie Mac Primary Mortgage Market Survey (PMMS), rates climbed higher from last week, moving back up near their highs of the year. Mortgage rates across the board increased by up to 7 basis point (bps). 30 year fixed mortgage rates are now only 1 bps lower than the highest recorded rate for the year which is 4.58%. Here is what happened to the rates last week per Freddie Mac PMMS:

• 30-year fixed-rate mortgage (FRM) averaged 4.57 percent with an average 0.7 point for the week ending September 5, 2013, up from last week when it averaged 4.51 percent. A year ago at this time, the 30-year FRM averaged 3.55 percent.
• 15-year FRM this week averaged 3.59 percent with an average 0.7 point, up from last week when it averaged 3.54 percent. A year ago at this time, the 15-year FRM averaged 2.86 percent.
• 5-year adjustable-rate mortgage (ARM) averaged 3.28 percent this week with an average 0.5 point, up from last week when it averaged 3.24 percent. A year ago, the 5-year ARM averaged 2.75 percent.
• 1-year ARM averaged 2.71 percent this week with an average 0.5 point, up from last week when it averaged 2.64 percent. At this time last year, the 1-year ARM averaged 2.61 percent.

Mortgage rates have been increasing in recent weeks because of stronger economic recovery and better news from housing and manufacturing sectors. However, a weaker than expected employment news released on September 6, 2013 should keep a lid on further increases for at least a few days.

Mortgage rates are directly impacted by trading of Mortgage Backed Securities (MBS) on the Wall Street. Since early May, the market has seen continued volatility as the investors are expecting the Fed to taper their bond purchase program that had helped to keep the rates low so far.

Whether you are looking to refinance or buy a home, this is not the time to play the market. It’s a good idea to lock the rate on the day the market improves i.e. rates trend a little lower. Those days are usually followed by reversal of fortunes.

Work with a loan officer who actively monitors the economy and MBS market and is able to guide you on when is a good time to lock the rate. Also, check if they offer a float down option, where in some cases you can get a lower rate if the rates go down even after locking.