Summary: Mortgage rates dipped for the third straight week, according to Freddie Mac. With a strong economy, wage increases, and very low mortgage rates, home purchase demand is increasing and expected to continue on this path for the short-term. This article will outline where rates are forecasted to be throughout the upcoming week.
Last week’s economic news included readings on construction spending and public and private-sector job growth. Weekly readings on mortgage rates and first-time jobless claims were also released.
Construction Spending Dips in December
Overall spending on public and private-sector construction spending dropped by -0.20 percent in December to an annual rate of $1.33 trillion. Analysts expected spending to increase by 0.10 percent based on November’s revised reading of 0.70 percent growth in construction spending.
Spending on residential construction rose 1.04 percent in December, which is good news for housing shortages in many areas of the U.S. Lower mortgage and interest rates have fueled builder confidence as fears about the impact of tariffs on building materials were diminished.
Chronic short supplies of homes, especially affordable homes, have impacted housing markets in recent years. Builders seeking higher profits have focused on high-end construction as demand increased for entry-level and mid-range homes. Slim supplies of available homes continued to sideline buyers who couldn’t find affordable homes or homes they wanted to buy.
Bidding wars and cash buyers in high-demand markets also add additional pressure to home buyers who depend on mortgage financing. Real estate pros and industry analysts have long said the only way to ease high demand and rapidly rising home prices is for builders to produce more homes at a variety of price points.
Mortgage Rates, New Unemployment Claims Fall
Freddie Mac reported lower fixed mortgage rates for the third consecutive week as the average rate for a 30-year fixed-rate mortgage fell six basis points to 3.45 percent. Rates for 15-year fixed-rate mortgages averaged three basis points lower at 2.97 percent.
Rates for 5/1 adjustable rate mortgages averaged eight basis points higher at 3.32 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable-rate mortgages.
New unemployment claims fell to 202,000 claims filed as compared to 215,000 new claims expected and the prior week’s reading of 217,000 first-time claims filed. The month-to-month reading for first time jobless claims is considered more stable and showed 211,750 new claims filed. The lowest post-recession month-to-month reading of 193,000 new claims filed was posted in April 2019.
Public and Private-Sector Jobs Increase in January
The government’s Non-farm Payrolls report posted 225,000 new public and private-sector jobs in January as compared to December’s reading of 147,000 jobs posted. An average of 211,000 public and private-sector jobs were added in the last three months. ADP reported 291,000 private-sector jobs added in January as compared to 199,000 jobs added in December.
The Commerce Department reported a national unemployment rate of 3.60 percent in January; analysts expected the unemployment rate to hold steady at December’s reading of 3.50 percent.
Current Numbers for WA, OR, ID, and CO
Washington State mortgage rates hit 4.09% and 3.71% for conforming 30-year mortgages and 5/1 ARMs, and for jumbo loans, the numbers in the state are 4.00% and 3.75% for 30-year mortgages and 5/1 ARMs, respectively. In Oregon, conforming loan rates are 4.03% for 30-year mortgages and 3.74% for 5/1 ARMs. For jumbo loans, the numbers are 3.99% for 30-year mortgages and 3.63% for 5/1 ARMs.
Mortgage rates in Idaho for conforming loans for 30-year fixed-rate mortgages is 3.90%, and 3.83% for 5/1 ARMs, while for jumbo loans, the numbers for each loan type are 3.73% and 3.52%, respectively. In Colorado, the rate for conforming loans for 30-year fixed-rate mortgages is 3.95%, and 3.61% for 5/1 ARMs. For jumbo loans, the numbers for each loan type are 3.98% and 3.67%.
This week’s scheduled economic reporting includes readings on inflation, retail sales and consumer sentiment. Weekly reports on mortgage rates ad first-time jobless claims will also be released.
Looking to Apply For a Mortgage?
Do you have questions about mortgages? Are you considering applying for one soon? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado. Our experts are on stand-by ready to work with you to help you choose which one of our mortgage programs is best for you. Contact us today with any questions you have about mortgages.