Mortgage rates increase again

The average interest rate for home loans continues to increase. According to Freddie Mac's Primary Market Survey and Bankrate, interest rates affixed to mortgages for real estate ticked up recently. These jumps in interest rates may encourage more individuals to enter the housing market and lock in a lower rate. This may bolster the continually improving real estate market. Rates climb, but remain historically low Freddie Mac's survey indicated the average 30-year fixed rate mortgage rose from 3.68 percent the previous week to 3.8 percent the week ending May 7. When compared to the previous year, this week's rate remained historically low. The current average interest rate is still 0.41 percentage points lower from last year at the same time. The slow increase may be the push that some individuals need who have been considering homeownership while rates have remained so low recently. In addition, a 15-year FRM increased to 3.02 percent from 2.94 percent the previous week. The average 15-year FRM now sits 0.3 percentage points below the average interest rate affixed to a home loan at this time last year. Bankrate also confirmed the increase in interest rates but reported slightly different average interest rates. The average 30-year FRM jumped to 4.07 percent while 15-year FRMs averaged around 3.17 percent. Behind the rise Bankrate and Freddie Mac also suggested that the increase in average interest rates for FRMs may have been due to currency fluctuation and a potential rise in inflation. "Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2 percent," stated Len Kiefer, deputy chief economist for Freddie Mac, according to the Primary Market Survey. "The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management's manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013." Bankrate noted the rates jumped substantially this week and pushed the 30-year FRM rate closer to the 4 percent benchmark. In addition, mortgage rates also relate closely to bond yields and these increased recently. The continual growth in the market largely depends on the entrance of first-time buyers. As household formations increase and interest rates continue to attract interested buyers, further strength can be expected from the housing sector.