Freddie Mac: Mortgage rates increase for third consecutive week

Consumer credit growth driving mortgage rates

Mortgage rates climbed for the third consecutive week, according to Freddie Mac’s latest Primary Mortgage Market survey.

Freddie Mac Chief Economist Sam Khater said the one-two punch of strong job and consumer credit growth drove mortgage rates up to their highest mark since the second of August.

According to the Primary Mortgage Market survey, the 30-year fixed-rate mortgage averaged 4.6% for the week ending Sept. 6, 2018, rising from 4.54% last week, and still remains to be significantly higher than last year’s rate of 3.78%.

“Mortgage rates are currently 0.82% higher than a year ago, which is the biggest year-over-year increase since May 2014,” Khater stated. “Looking ahead, annualized comparisons for mortgage applications may look weaker than they appear, but that’s primarily because of the large spread between mortgage rates now and last September, which was when they reached their low for the year.”

This week, the Mortgage Bankers Association’s Weekly Mortgage Applications Survey indicated mortgage applications fell 1.8% from last week, for the week ending September 7, 2018.  

Freddie Mac, Sep 13

(Source: Freddie Mac)

The 15-year FRM averaged 4.06% this week, climbing from last week's 3.99%. This time last year, the 15-year FRM was 3.08%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage remained unchanged at 3.93% this week, which is still up from this time last year when it was 3.13%. 

“Overall, this spectacular stretch of solid job gains and low unemployment should help keep homebuyer interest elevated,” Khater added. “However, mortgage rates will likely also move up, as the Federal Reserve considers short-term rate hikes this month and at future meetings.”

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