This was the worst week for mortgage rates in nearly two years with the average 30-year fixed rate climbing an eighth of a percentage point. New data shows the U.S. economy is firing on all cylinders including a new North American trade deal announced by the Trump Administration and a strong jobs report. The Federal Reserve also signaled its favorable view of the economy last week by raising short-term interest rates.
Investors are trading based on the idea that the economy is bound to remain strong and are selling off Treasury bonds in favor for a bullish stock market. Mortgage rates are closely linked to the yield on the 10-year note, as yields rise, home loan rates follow suit. Bond yields soared to multiyear highs this week, particularly after a strong jobs report released on Friday showing the unemployment rate is at a 49-year low.
While compared to historical averages mortgage rates are relatively low, they are currently near a 7-year high. Conforming no-point 30-year fixed mortgage rates are averaging 4.75 percent, 15-year rates are near 4.25 percent and the 5-year ARM is averaging 4.15 percent.
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