Mortgage rates move higher on strong economic forecasts
Economic data, government reopening pushes up market confidence
Fixed mortgage rates moved higher for the first time in three weeks amid positive economic data out of the manufacturing and non-manufacturing sectors.
Additionally, the U.S. expanded by an annual pace of 2.8% in the third quarter, which is the biggest increased in a year as a result of a large buildup in business inventories and trade improvement, according to the government.
Market participants are confident that the economy will continue to improve into 2014, fueling a rising in rates.
For instance, nearly 46% of corporate directors expect better economic conditions a year from now, according to the National Association of Corporate Directors.
The 30-year, fixed-rate mortgage came in at 4.16%, up from 4.10% last week, and also up from 3.40% last year, Freddie Mac said in its Primary Mortgage Market Survey.
“Production in the manufacturing industry expanded for the fifth month in a row in October to the strongest pace since April 2011,” said Freddie Mac vice president and chief economist Frank Nothaft.
He said, “Similarly, the non-manufacturing sector grew for the second consecutive month in October and beat the market consensus forecast of a decline. These increases were widespread across the nation, from Chicago to Milwaukee to New York.”
The 15-year, FRM increased 3.27%, up from 3.20% last week and a steep rebound from 2.69% last year.
Meanwhile, the 5-year Treasury-index adjustable-rate mortgage averaged 2.96%, unchanged from last week, but an increase from 2.73% a year ago.
Additionally, the 1-year Treasury-index ARM came in at 2.61%, dropping from 2.64% last week, but up from 2.59% a year earlier.
Mortgage rates moved higher this week as the post-government freeze clouds have begun to lift, Bankrate.com noted.
Consequently, this is enough to lift yields on long-term government bonds and mortgage rates, leading into this week’s job’s report.
Bankrate’s 30-year FRM rose to 4.35% from 4.27% a week earlier.
Additionally, the 15-year, FRM increased to 3.42%, up from 3.38%, while the 5/1 ARM dropped to 3.25%, down from 3.26%.