The average fixed mortgage rates nudged higher in the second week of August, reversing course from the first week, which showed a slight dip, according to recently released numbers from Freddie Mac’s Primary Mortgage Market Survey®, also known as the PMMS®.
Numbers released August 13th, indicated a slight increase in the average fixed mortgage rates with a 30-year-fixed rate mortgage averaging 3.94 percent, which was up from 3.91 the week prior.
The upswing could be due to the July Employment Report.
July Employment Report
Released August 7th, the July employment report from the Bureau of Labor Statistics (BLS) showed the total nonfarm payroll employment increased by 215,000 in July. In comparison, the average monthly gain when looking over the past 12 months was 246,000. Job gains were found in retail trade, health care, professional and technical services, and financial activities.
The BLS reported the unemployment rate remained unchanged, leveling it at 5.3 percent.
Averages on Fixed Rate Mortgage
According to the August 13th PMMS report from Freddie Mac:
- 30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.6 point for the week ending August 13, 2015, up from last week when it averaged 3.91 percent. A year ago at this time, the 30-year FRM averaged 4.12 percent.
- 15-year FRM this week averaged 3.17 percent with an average 0.6 point, up from last week when it averaged 3.13 percent. A year ago at this time, the 15-year FRM averaged 3.24 percent.
Time to Secure 30-Year Fixed Rate Mortgage
For home buyers, one of the most confusing aspects of the loan process is selecting the right loan when purchasing a home. The 30-year fixed rate mortgage is the most popular and since the interest rates are so low, it is a great time to secure this type of loan.
The benefits in choosing a 30-year FRM over other options includes:
- Fixed Payment: The name says it all. As a fixed mortgage is that you know exactly what your mortgage payment will be over the next 30-years that this loan.
- Build Equity: Another advantage is that it allows a homeowner to build equity. Every month you pay your mortgage, a portion of it goes toward paying down the loan, which builds a homeowner’s household equity.
- Increased Cash Flow: A borrower can save hundreds of dollar each month by selecting a 30-year mortgage versus a 15-year. Although the 15-year mortgage may offer a lower interest rate, the payments are often 40% higher than a 30-year.
Adjustable Rate Mortgages
Adjustable rate mortgages, known as ARMs, are enticing for some home buyers because many ARMs will start at a lower interest rate than fixed rate mortgages. Although this initial rate may stay the same for months or years, it also fluctuates.
The August 13th PMMS report from Freddie Mac indicated the following for ARMs:
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.93 percent this week with an average 0.5 point, down from last week when it averaged 2.95 percent. A year ago, the 5-year ARM averaged 2.97 percent.
- 1-year Treasury-indexed ARM averaged 2.62 percent this week with an average 0.3 point, up from last week when it averaged 2.54 percent. At this time last year, the 1-year ARM averaged 2.36 percent.
