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HSH.com Mortgage Rates Radar: Your first report on the mortgage market this week

Mortgage rates jump higher this week

 

Rates on the most popular types of mortgages jumped a bit this week, with fixed-rate mortgages climbing by a tenth of a percentage point according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by 10 basis points (0.10 percent) to 3.87 percent. Conforming 5/1 Hybrid ARM rates increased by just 2 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.95 percent.

"After a long stretch of strengthening, the dollar has settled back a bit, lifting interest rates," said Keith Gumbinger, vice president, HSH.com. "The dollar had been gaining strength partly due to the expectation that the Fed might move as soon as June, but after the report showing that U.S. first-quarter Gross Domestic Product gain was meager, it appears that the last of the bets on a June or even a summer move by the Federal Reserve unwound last week."

Interest rate moves depend largely upon economic growth and inflation trends, but in a global economy, changes in the value of currencies can have an effect as well. With soft U.S. growth, and with expectations that growth in other economies will improve, those currencies are relatively stronger even as the dollar is relatively weaker at the moment. A weaker dollar has effects on inflation as well, as the cost of goods brought into the U.S. become more expensive. Although inflation has not been an issue for the Fed to contend with, pricier oil and firming costs of inbound goods due to the change in the value of the currency will add to price pressures over time.

"Financial markets are adjusting to a new climate, with an expectation of lower growth and interest rates in the U.S. for a more protracted period of time," adds Gumbinger. "However, investor minds can change suddenly, as we've seen in the past couple of weeks. Rates are moving higher for the moment, but really don't have all that much space to rise, given the domestic economic climate."

Average mortgage rates and points for conforming residential mortgages for the week ending May 05, according to HSH.com:

HSH.com Mortgage Rates Radar - Four Week Trend

Conforming 30-year fixed-rate mortgage
-Average Rate:   3.87 percent
-Average Points: 0.17

Conforming 5/1-year adjustable-rate mortgage
Average Rate:   2.95 percent
Average Points: 0.09

Average mortgage rates and points for conforming residential mortgages for the previous week ending April 28 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage
-Average Rate:   3.77 percent
-Average Points: 0.15

Conforming 5/1-year adjustable-rate mortgage
-Average Rate:   2.93 percent
-Average Points: 0.09

Methodology

The Weekly Mortgage Rates Radar reports the average rates and points offered on conforming 30-year fixed-rate mortgages and conforming 5/1 ARMs. The weekly mortgage rate survey covers a large sample of mortgage lenders and is conducted over a Wednesday-to-Tuesday cycle, with data released every Wednesday. HSH.com’s survey helps consumers find the best rates on home loans in changing market conditions. Unlike mortgage rate surveys that report average rates only, the Weekly Mortgage Rates Radar’s inclusion of both average rates and average points provides a more accurate view of mortgage terms currently offered by lenders.

Every week, HSH.com conducts a survey of mortgage rate data for a wide range of consumer mortgage products including ARMs, FHA-backed and jumbo mortgages, as well as home equity loans and lines of credit from hundreds of direct lenders in the U.S. For information on additional loan products, visit HSH.com.

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