Mortgage rates broke out this week after an extended period of calm, boosted by positive economic data and a surprisingly strong monthly employment report. Job growth, in particular, has surged significantly in recent months, enough to bring forward expectations of a Federal Reserve interest rate hike to as early as the June 2015 meeting, according to Bankrate Inc.
The strength of the U.S. economy, at least for this week, was enough to overshadow the concerns about slower growth in both developed and emerging markets around the globe. The prospects for higher rates sapped some of the demand for bonds, with both government bond yields and mortgage rates moving higher in response. Mortgage rates are closely related to yields on long-term government bonds.
One year ago, the average 30-year fixed mortgage rate was 4.48%. At that time, a $200,000 loan would have carried a monthly payment of $1,011.00. With the average rate now around 3.9%, the monthly payment for the same size loan would be $943.34, a savings of $67 per month for anyone refinancing now.
Mortgage rates have been edging higher after hitting a 20-month low. Freddie Mac reported that the average rate of a 30-year fixed rate mortgage increased to 3.69% last week from 3.59% a week earlier. The average 15-year was now at 2.99% up from 2.92%.