Bolstered by better-than-expected economic data, mortgage rates appear headed up, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average soared to its highest point in nearly seven months, rising to 3.63 percent with an average 0.8 point. It was up from 3.52 percent a week ago, but down from 3.92 percent a year ago. Since climbing above 3.5 percent in late January, the 30-year fixed rate has held steady or increased every week but one.
The 15-year fixed-rate average also went up, increasing to 2.79 percent with an average 0.8 point. It was 2.76 percent a week ago and 3.16 percent a year ago. The 15-year fixed rate has not been above 3 percent in nearly 10 months.
Hybrid adjustable-rate mortgages were mixed. The five-year ARM fell to 2.61 percent with an average 0.6 point. It was down from 3.63 percent. The one-year ARM rose to 2.64 percent with an average 0.4 point. It was up from 2.63 percent last week.
Frank E. Nothaft, Freddie Mac vice president and chief economist, pointed to strong job growth and consumer spending for the rise in the rates.
“The economy added 236,000 new workers in February, which helped push down the unemployment rate to 7.7 percent,” Nothaft said in a statement. “This helped offset the effects of the payroll tax holiday expiration and led to a 1.1 percent increase in retail sales, which was well above the market consensus forecast.”
Not surprisingly, as rates rose, mortgage applications showed a decline for the third time in four weeks, according to the Mortgage Bankers Association.
After rising last week for the first time in three weeks, the Market Composite Index, a measure of loan application volume, fell 4.7 percent from the previous week. The Refinance Index decreased 5 percent, while the Purchase Index dropped 3 percent.
The refinance share of mortgage activity tumbled to its lowest level in 10 months, accounting for 76 percent of total applications.
“The announcement of stronger than anticipated job growth last week led to an increase in interest rates, with the 30-year fixed mortgage rate in our survey reaching the highest level in more than six months,” said Mike Fratantoni, MBA’s vice president of research and economics. “Refinance applications declined as a result, but remain high given the steady flow of HARP applications.”