Mortgage rates take jump

Mortgage rates increased again this week after strong labor data bolstered the case for the Federal Reserve to start raising rates soon. The uptick compelled borrowers to make a move rather than sit on the sidelines risking more increases.

“We began to get the kind of economic data that is showing the economy is in good shape and that the slowdown at the beginning of the year was not fundamental,” says Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. “It has made investors realize that the Fed is actually going to increase rates, which the markets hadn’t accepted, even though economists had been saying it for a long time.”

The continued global sell-off in government bonds and a $21 billion government auction of 10-year Treasuries on June 10 also pushed rates up.

But it was three recent reports on the job market that buoyed the 10-year Treasury yield, which mortgage rates tend to follow, by further supporting a future increase in the federal funds rates, a benchmark for interest rates on consumer and business loans. Naroff expects the Fed’s first rate hike to come in September. The Fed’s monetary policy-making group meets next week.

The benchmark 30-year fixed-rate mortgage rose to 4.15 percent from 4.03 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.34 percent. Four weeks ago, it was 4.01 percent. The mortgages in this week’s survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.06 percent. This week’s rate is 0.09 percentage points higher than that 52-week average. The last time the 30-year fixed was higher was in Bankrate’s Oct. 8 survey, at 4.18 percent.