Mortgages rates fall slightly this week despite U.S. job growth

Mortgage rates edged lower this week despite signs of steady growth in the labor market. But potential mortgage borrowers should keep their eyes on the Fed if they want to keep track of when rates will rise.

The benchmark 30-year fixed-rate mortgage fell to 4.47 percent from 4.54 percent the previous week, according to the Bankrate.com national survey of large lenders. One year ago, that rate stood at 3.64 percent. Four weeks ago, it was 4.5 percent. The mortgages in this week’s survey had an average total of 0.33 discount and origination points. The benchmark 15-year fixed-rate mortgage fell to 3.52 percent from 3.58 percent last week. The benchmark 5/1 adjustable-rate mortgage was 3.34 percent, the same as last week. The benchmark 30-year fixed-rate jumbo fell to 4.48 percent from 4.54 percent.

Investors lose, borrowers win

Stock market losses helped keep mortgage rates low this week, says Brett Sinnott, director of secondary marketing for CMG Mortgage Group in San Ramon, Calif.

“Rates are heading down this week with the biggest contributor being the fall in the stock market,” Sinnott says. “Many large investors are recommending a move into less risky assets, which is why we have seen a decrease on the 10-year and mortgage rates following the downward trend.”

Borrowers dodged a bullet

Some analysts had feared that a strong March employment report would push rates up. But rates have actually declined since the Labor Department released the report on Friday.

With 192,000 jobs added in March, the pace of growth almost met the expectations of economists, but it wasn’t strong enough to make investors dump safer investments such as Treasury and mortgage bonds.

More job openings

On Tuesday, a separate report also offered good news for the labor market. Job openings increased 299,000 to a seasonally adjusted 4.17 million, the highest level since 2008.

But for the most part, rates seem to have ignored the reports.

“I just don’t think rates are really going anywhere right now,” says Bob Moulton, president of Americana Mortgage in Manhasset, N.Y. “The economy is not as good everyone thinks it is.”

What happens next with rates will depend on how investors interpret the minutes of the latest Fed meeting. The document was released Wednesday afternoon.

“I still think the Fed will have the biggest effect on interest rates in the near term,” Sinnott says. “If at any point they describe a plan, or outline, that involves raising interest we will see an immediate and severe reaction.”

Spring home-buying season not great

The Fed also noted that the pace of home sales appears to have softened, partly due to the severe weather but also due to rising prices.

“The return of house prices to more-normal levels could be damping the pace of the housing recovery, and that home affordability has been reduced for some prospective buyers,” the minutes read.

The lack of inventory of homes for sale remains a big issue, Moulton says.

“People are looking, but there’s limited inventory,” he says. “I’m seeing ads in the local paper where Realtors are saying we ‘have buyers, we are looking for sellers.’ “