Mortgage rates reversed much of the previous week's decline after the monthly employment report and strong retail sales hinted at underlying strength in the economy. In the current good-news-is-bad-news economic climate, any signs of economic strength are feared to feed inflation and prompt another Fed hike. While that might be a stretch, good economic news certainly prolongs the period of time until the Fed might cut rates. Investors don't respond kindly to that, pricing bond prices lower and bond yields higher. Mortgage rates are closely related to the yields on long-term government bonds.
Fixed mortgage rates have moved sharply lower since the Fed stopped raising interest rates. When the Fed last hiked rates in late June, the average 30-year fixed mortgage rate was 6.93 percent. At the time, the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.013 percent, the same loan originated today would carry a monthly payment of $1,003.09. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. The panelists see the good times continuing, with half predicting rates will remain unchanged in the next several weeks. Among the other half of respondents, 30 percent expect rates to retreat again while just 20 percent forecast that rates will increase further.
