Mortgage Rates Rise Again in Face of Consumer Spending

Mortgage rates climbed for the third straight week following recent reports that home sales and consumer spending performed better than expected in November, Freddie Mac and Bankrate.com reported today in their weekly surveys.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage climbed to an average 6.18 percent (from 6.13 percent last week), while the 15-year fixed-rate mortgage gained from 5.89 percent to 5.93 percent.

Points - which are fees charged by lenders for loan processing expressed as a percent of the loan - averaged 0.4 on the 30- and 15-year loans.

“Mortgage rates edged up over the week following news of a jump in consumer spending in November,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Financial markets were concerned that stronger spending could keep inflation elevated. These worries were further compounded by the releases of new- and existing-home sales for the same month, which both exceeded market forecasts and caused Treasury bond yields to continue to rise.”

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.98 percent this week, with an average 0.5 point, up from 5.96 percent last week. The one-year Treasury-indexed ARM averaged 5.47 percent this week, with an average 0.6 point, up from last week’s 5.44 percent.

In Bankrate.com’s survey, mortgage rates moved higher for the third consecutive week following strong consumer spending figures for November. The average 30-year fixed-rate mortgage is now 6.23 percent, with an average of 0.25 discount and origination points.

The average 15-year fixed-rate mortgage - popular for mortgage refinancing - nosed higher to 5.96 percent. On larger loans, the average jumbo 30-year fixed rate was down slightly to 6.44 percent. The average 5/1 adjustable-rate mortgage climbed to 6.11 percent, and the average one-year ARM increased to 5.93 percent.

Bankrate.com said mortgage rates increased following a report about strong consumer spending in November. This was additional evidence, following other reports in recent weeks on retail sales and a strong labor market, that any hopes of a Fed rate cut coming soon are premature.

Bond yields and mortgage interest rates - whose movement is closely tied - were only slightly higher, as there was little else of significance during a holiday-shortened week with light trading volumes.