Mortgage rates hold steady following three-week rise

Mortgage rates barely budged this week, falling slightly after a recent jobs report came in below expectations but still signaled a largely growing economy.

The benchmark 30-year fixed-rate mortgage fell to 4.13 percent from 4.14 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.48 percent. Four weeks ago, it was 4.01 percent. The mortgages in this week’s survey had an average total of 0.27 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.37 percent. This week’s rate is almost a quarter of a percentage point lower than the 52-week average. The benchmark 15-year fixed-rate mortgage fell to 3.32 percent from 3.34 percent. The benchmark 5/1 adjustable-rate mortgage rose to 3.22 percent from 3.18 percent. The benchmark 30-year fixed-rate jumbo rose to 4.15 percent from 4.14 percent.

“There’s been very little movement, surprisingly,” says Jay Voorhees, broker/owner of JVM Lending in Walnut Creek, California.

Before this week, mortgage rates had risen three weeks in a row.

Employment looking good

On Nov. 7, the federal government said that employers added 214,000 jobs in October, lower than the 230,000 jobs that economists had expected. However, the employment rate fell to 5.8 percent from 5.9 percent, and the jobs figures for August and September were revised higher.

“I don’t think it had a big effect because it’s fairly close to expectations and the number continues to post over 200,000,” says Brian Rehling, chief fixed-income strategist for Wells Fargo Advisors.

Feds happy with jobs

Rehling noted that the Federal Reserve’s policymaking group seemed to be more comfortable with the labor market in its statement last week and that inflation would be the key factor for the central bank.

“The jobs report’s impact on Fed policy is lessening a bit as the focus becomes more on inflation data due to oil prices,” he says, which will help determine when the Fed will begin raising the federal funds rate, a benchmark for rates on consumer and business loans.

Additionally, the voting bloc of the FOMC next year will lose two of its members who are hawkish on raising rates, he says.

The holiday barometer

The Fed could change its stance depending on how consumer sentiment and retail spending go for the rest of the year, especially holiday shopping, says Joel Naroff, president of Naroff Economic Advisors. Retail sales for October are due out on Friday.

What should borrowers do?

This week, the volume of mortgage applications fell 0.9 percent from the previous week, according the Mortgage Bankers Association. That included a 2 percent decline in refinances and a 1 percent uptick in purchases. But borrowers should take note that rates remain in their favor, Voorhees says.