Disappointing Jobs Numbers will Force Mortgage Rates Lower
Already low mortgage rates will decline further in the coming days because of an extremely disappointing May jobs report. Markets expected 165,000 jobs were created in May but only 38,000 jobs were created. The bad news on employment sent 10 year bond yields down 14 basis points to 1.70 percent this past Friday.
By the end of this week, we expect average mortgage rates to decline between 5 to 15 basis points. Current 30 year mortgage rates are averaging 3.73 percent, so we could see average 30 year rates fall towards 3.65 percent. Thirty year rates near 3.65 percent hasn't been seen since May of 2013.
15 year mortgage rates today are averaging 2.71 percent, down 5 basis point from last week's average 15 year rate. Over the next week, average 15 year rates will decline towards 2.65 percent. The last time 15 year rates were as low as 2.65 percent was in April 2013.
The decline in fixed long term mortgage rates won't last for long. Eventually the Federal Reserve will increase their key benchmark interest rate, the federal funds rate. Increases in the fed funds rate will drive bond yields higher and in turn will drive mortgage rates higher.
Average 5 year adjustable rates are currently averaging 2.87 percent, a decline from last week's average rate of 2.90 percent. Current 5 year jumbo adjustable mortgage rates are at 3.41 percent, up from last week's average 5 year jumbo rate of 3.29 percent.
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