Mortgage Rates Jump For Third Week

Mortgage rates jumped for the third week in a row, according to the latest weekly survey from Freddie Mac.

  • The 30-year fixed-rate mortgage averaged 6.50% for the week ending February 23, up from 17 basis points from last week and 261 basis points from the same time last year.
  • The 15-year fixed-rate mortgage averaged 5.76% for the week ending February 23rd, up 21 basis points from last week and up 262 basis points from the same time last year.

Rough Month. It has been a rough month for rates with the 30-year up 40 basis points from February 2nd and the 15-year is up 62 bips.

MBS. The current 30YR 5.0 fell 25 cents for the week closing at $98.38 on Thursday.

Jobless Claims Stay Under 200k

Initial jobless, once again, defied economist predictions and stayed under 200k, according to the latest weekly survey from the Department of Labor.

  • Seasonally adjusted initial claims were 192,000, a decrease of 3,000 from the previous week’s revised level and the 6th straight week claims have been under 200k.
  • Economists predicted claims would rise to 200k.

Continuing Claims. The seasonally adjusted insured unemployment during the week ending February 11 was 1,654,000, a decrease of 37,000 from the previous week’s revised level. This was better than the 1.7M that economists were projecting.

States. California reported the biggest drop in initial claims with 4,276 fewer claims followed by Michigan (-2,615) and New york (-1,938).

  • On the flip side, Kentucky had a huge jump with 6,101 new claims for the week.

That 3% Mortgage Just Keeps Getting Better

Conor Sen writes in Bloomberg that we’ve already seen homeowners grow reluctant to sell their houses because it would mean giving up their cheap mortgages. However, with skyrocketing short-term rates there is another reason to hold on to that sub-3.0% mortgage.

  • “Now ever-escalating short-term interest rates are going to make it possible for them to turn their financial position into the kind of carry trade that would be the envy of a bank or hedge fund.”

It’s just basic math. “In a case where someone has a $300,000, 30-year mortgage with a rate below 3% while also having $300,000 available in cash, interest rates on low-risk short-term investments are getting high enough to generate income that can cover principal, interest, taxes and insurance on a mortgage. That would essentially allow them to live in their house for free before maintenance costs.”

Read Full Piece at Bloomberg