Mortgage Loan Rates Stop Their Plummet

Red arrow dips then rises
Mortgage loan interest rates ran a good course over the past month and a half, but this Thursday they broke their six-week streak of record-breaking lows and finally reversed in the opposite direction.

According to Freddie Mac, average 30-year fixed mortgage rates rose by 0.04 percent, landing at 3.71 percent.

The 15-year average mortgage loan rate also rose, but still remained below the 3 percent threshold, as it landed at 2.98 percent.

Conversely, adjustable rate mortgages dipped slightly, with the 5-year hybrid ARM landing at 2.80 percent and the 1-year ARM dropping to 2.78 percent.

Frank Nothaft, Freddie Mac’s vice president and chief economist, attributed these mild interest rate improvements to some of the economic data reports released this week.

The Federal Reserve Board reported that household net worth rose by $2 trillion to $62.9 trillion over the first three months of 2012 primarily due to increases in stock markets,” said Nothaft. “However, homeowners saw an aggregate $372 billion rise in property values over the first three months of this year.”

In tandem with the positive reports cited by Nothaft, the Consumer Price Index (CPI) released a positive report on Thursday as well, which helped contribute to the interest rate reversal.

The CPI’s report measured the level of inflation based on the price of goods purchased by consumers, and found that inflation is on the decline. Such a report matches the CPI’s earlier forecasts, and has helped bolster the confidence of the economy.

However, the impact of these higher rates on the housing market has yet to be seen.

According to the Mortgage Bankers Association (MBA), the number of mortgage loan applications rose to 18 percent for the week ending on Wednesday, which is the highest level seen since May 2009. But that increase is likely a direct result of the historically low rates that last week’s interest rate report yielded.