Freddie Mac: Mortgage rates continue to tick up
Posted on Thursday, November 14, 2013 at 10:25:46 AM
When it comes to residential financing, should borrowers choose a fixed-rate mortgage or an adjustable-rate one?
This is the question that could be on many people's minds as rates continue to rise. According to Freddie Mac's recent Primary Mortgage Market Survey, the 30-year fixed-rate mortgage averaged 4.35 percent for the week ending Nov. 14. In comparison, the 5-year Treasury-indexed hybrid adjustable-rate mortgage only averaged 3.01 percent.
"Fixed mortgage rates increased this week following stronger than expected economic data releases," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Nonfarm payrolls increased by 204,000 in October, above the consensus forecast. In addition, revisions added 60,000 additional jobs to the prior two month releases. Preliminary estimates indicate Real GDP growth in the third quarter was 2.8 percent, also above consensus."
Given the stronger economy and rising rates, some borrowers may want to choose an ARM when starting a residential financing plan. According to MarketWatch, this route could save homeowners thousands of dollars.
If a budget can account for the possible fluctuations in monthly payments, this strategy could work, the news source noted. Borrowers shouldn't use an ARM to buy a home they can't afford, however, or if they plan on staying put for a very long time.