Mortgage rates reflect mixed economic news

Figures essentially remain unchanged

Mortgage interest rates essentially remained unchanged this week as economic news piled up in all directions: up, down and sideways.

“Things that should have maybe pushed rates a little bit lower never pushed them lower,” says Rob McAllister, mortgage broker at West Seattle Mortgage in Seattle.

AMONG THE NEWS ITEMS:

The U.S. Bureau of Labor Statistics reported Tuesday that the seasonally adjusted Consumer Price Index increased 0.4 percent in April. This index was up 1.1 percent over the last 12 months.

The U.S. Department of Housing and Urban Development reported, also Tuesday, that domestic housing starts rose to a seasonally adjusted and annualized rate of 1.17 million in April.

The Chinese government took steps to stimulate that nation’s economy, triggering a U.S. stock market surge, according to news reports.

“Europe and Japan are superaccommodative now,” McAllister says. “If that (didn’t) push rates lower, I don’t know what would.”

MORTGAGE RATES THIS WEEK

The benchmark 30-year fixedrate mortgage rose to 3.76 percent from 3.75 percent, according to Bankrate’s May 18 survey of large lenders. A year ago, it was 4.03 percent. Four weeks ago, the rate was 3.75 percent. The mortgages in this week’s survey had an average total of 0.18 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 3.98 percent. This week’s rate is 0.22 percentage points lower than the 52-week average.

The benchmark 15-year fixedrate mortgage fell to 2.98 percent from 2.99 percent.

The benchmark 5/1 adjustablerate mortgage rose to 3.18 percent from 3.11 percent.

The benchmark 30-year fixedrate jumbo mortgage rose to 3.78 percent from 3.77 percent.

FED MIGHT ACT IN JUNE

The Federal Reserve on Wednesday released minutes of the April 26-27 meeting of its Federal Open Market Committee, FOMC, which sets the federal funds rate.

According to the minutes, the FOMC left open the option of raising its target range for the rate in June “if incoming (economic) data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective.” The rate is currently 0.25 percent - 0.50 percent.

The caveat is important. Because growth might not pick up, labor market conditions might not continue to strengthen and inflation might not make progress toward the 2 percent objective.

The FOMC’s minutes and the stock market’s largely negative immediate reaction didn’t affect this week’s mortgage rate survey because the data were collected before the news was out.

How this news of the Fed’s thinking might effect next week’s rate survey remains to be seen.

RATES STILL LOW

Overall, mortgage rates remain exceptionally low.

“Big picture, we’re still looking at rates being in a really great place for buyers,” McAllister says.

Low rates may be small consolation for buyers who can’t locate a home they like in their price range due to what the National Association of Realtors recently characterized as “relentless supply constraints.”

In a statement, NAR Chief Economist Lawrence Yun says the U.S. housing market “continues to expand at a moderate pace” even though home prices are rising in some areas and not enough new houses are being constructed.

“Pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer,” Yun says.

THINKSTOCK “Things that should have maybe pushed rates a little bit lower never pushed them lower,” says Rob McAllister, mortgage broker at West Seattle Mortgage in Seattle.