Author bio section
Manufacturer sentiment has grown in October according to ISM’s October Manufacturing Index but the reading of 48.3, despite being an uptick on September’s 47.8, is still below 50 (chief wreckers being weak global growth cues, appreciated dollar and trade skepticism). This, though, spells good tidings for the mortgage market.
With over a decade of following economic expansion, one expects the labor market to rally. And while the October percentage may not be as good as recent times, adding 128,000 new jobs and posting 3.6% unemployment rate is applaudable (and, in fact, beyond expectation), given that the country grappled with the most potent private-employer strike in recent memory.
The Bureau of Labor Statistics believes that the jobs added could well have closed on 187,000 if not for the impediments caused by strike. Were that to happen, October could have done better than the yearly average of 167,000.
MortgageRates: Hike across the board
This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals an increase in mortgage rate across the board.
According to the MBA Weekly Survey: “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.02 percent from 3.92 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.”
1 point in cost = 1% of the loan amount
“The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.01 percent from 3.96 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”
“The average contract interest rate for 15-year fixed-rate mortgages increased to 3.40 percent from 3.39 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”
“The average contract interest rate for 5/1 ARMs increased to 3.43 percent from 3.29 percent, with points decreasing to 0.23 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”
Mortgage Rate Activity and Predictions
Half of those surveyed by the Bankrate’s weekly survey of mortgage and economic experts, countrywide, expect the rates to remain unchanged for the coming week (30th October to 6th November).
Out of those surveyed, 20% predict a rate hike while 30% foresee a decline in rates. The remaining 50% believe rates will remain unchanged (with a maximum movement of two basis points either side).
Freddie Mac’s weekly mortgage survey reported that the conforming rates for the week- 24th October to 30th October- are looking up ever so imperceptibly, the hike being 0.01% for 15 Y fixed and 0.03% for 30Y fixed.
Freddie Mac’s weekly mortgage survey noted, “This week marks the third consecutive week of rate increases, which hasn’t happened since April of this year. That said, purchase activity continues to show strength, indicating obvious homebuyer demand. However, the lack of housing supply remains a major barrier to not just the housing market, but the overall economic recovery.”
Mortgage Rate Lock Advice
Lock if you are closing within a week and float otherwise. In passing, keep an eye on any possible change in either your credit report or mortgage application between the agreement and eventual process of underwriting. Why? Because this may allow your lender to nullify the arrangement.