Weak jobs report helps sink mortgage rates

By Palm Beach Business.com

DELRAY BEACH — One side benefit to June’s lousy jobs report: it helped sink mortgage rates for a second weak in a row.

Freddie Mac’s Primary Mortgage Market Survey found the 30-year fixed-rate mortgage averaging 5.20 percent with 0.7 point, down from last week when it averaged 5.32 percent. It’s the lowest point in six weeks.

Bankrate’s national mortgage survey spotted the 30-year at 5.59 percent, down from last week’s 5.70 percent. Bankrate’s survey tends to be higher than Freddie Mac’s.

“Interest rates for 30-year fixed-rate mortgages fell for the second week in a row to the lowest level in six weeks amid market concerns over a weakening labor market,” Freddie Mac Chief Economist Frank Nothaft said. “The economy lost 467,000 jobs in June, more than the market consensus, and the unemployment rate rose to 9.5 percent, the highest since August 1983.

“Moreover, hourly employee wages increased at an annual rate of 0.7 percent on average in the second quarter of 2009, the smallest gain since records began in 1964.”

Also from the Freddie Mac survey:

— The 15-year this week averaged 4.69 percent with 0.7 point, down from last week’s 4.77 percent.

— Five-year adjustable-rate mortgages averaged 4.82 percent this week with 0.6 point, down from last week’s 4.88 percent

— One-year ARMs averaged 4.82 percent this week with an average 0.6 point, down from last week when it averaged 4.94 percent.

The average 15-year fixed rate mortgage retreated to 4.93 percent, while the average jumbo 30-year fixed rate dipped to 6.86 percent. Adjustable rate mortgages were mixed, with the average 1-year ARM inching higher to 5.18 percent and the 5-year ARM sinking to 5.05 percent.

Nothaft noted that the weak jobs market coupled with fall home values is increasing default rates on home equity loans and lines of credit. The American Bankers Association reported that the number of home equity loans that were 30 days or more delinquent rose to a record high of 3.52 percent in the first quarter and home equity lines of credit also reached a record of 1.89 percent.

Those loans totaled $1.1 trillion outstanding in the first quarter of 2009, representing nearly 10 percent of all home mortgage debt, according to the Federal Reserve Board.

Bankrate said the recent pullback in mortgage rates  presents an opportunity for refinancers to lock in. Holding out for the return of sub-5 percent rates, however, may prove to be fruitless.

Bankrate's panel of mortgage experts don’t expect rates to rise significantly in the near term, but they’re unclear whether they’ll hold right where they are or fall. Only 19 percent of the panelists foresee see an increase in rates, while 37 percent forecast further declines and 44 percent expect mortgage rates to remain more or less unchanged over the next 30 to 45 days.