A confluence of positive economic data is good news for the capital markets, but for would be home buyers, it could mean more rate-hiking by the Federal Reserve as mortgage rates have already hit a level not seen in eight years.
Secondary mortgage market participant Freddie Mac published the results of its Primary Mortgage Market Survey, showing that the 30-year fixed-rate mortgage averaged 4.94% for the week ending Nov. 8, 2018, which represents an increase from 4.83% the prior week and last year’s average rate of 3.9%. The rise in rates curbed buyer enthusiasm as existing home sales are on a six-month decline, while new home sales have fallen for the last four months.
“The economy continued to show resilience as strong business activity and growth in employment drove the 30-year fixed mortgage rate to a seven-year high of 4.94% – up 11 basis points from last week,” Freddie Mac Chief Economist Sam Khater said.
On the shorter term mortgage lending side, the 15-year fixed-rate average climbed to 4.33% versus the previous week’s level of 4.23% a week ago and 3.24% during the previous year.
Meanwhile, the five-year adjustable rate mortgage ticked higher to 4.14% versus 4.04% just a week ago and 3.22% the previous year.
“The all-important read on the American labor market showed stronger-than-expected employment and wage growth, which gives the Federal Reserve yet another data point suggesting that the U.S. economy can withstand higher interest rates,” said Aaron Terrazas, senior economist at Zillow. “The upward momentum for rates is likely to continue in the near term.”