Mortgage rates rise a little, boosted by housing

Mortgage rates inched up this week following satisfactory news about the housing market’s progress.

Numbers for new residential construction came in better than expected, which temporarily pushed U.S. Treasury bond yields higher on Tuesday. Mortgage rates commonly move in the same direction as government bond yields.

Housing starts edge up

Housing starts in July were at an annual rate of 1.206 million units — a 0.2 percent increase over June, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. Last month’s rate is 10.1 percent higher than the July 2014 rate.

“The housing market is a leading light of the economy, and it looks like that will be the case for a while,” says Joel Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pa.

“Home construction edged up in July to a level not seen since the fall of 2007.”

Single-family housing starts were up 12.8 percent month over month while multifamily starts fell 17.1 percent.

Homebuilder confidence has risen to a nearly 10-year high, the National Association of Home Builders reported this week.

A look at this week’s rates

• The benchmark 30-year fixed-rate mortgage rose to 4.06 percent from 4.04 percent, according to Bankrate’s Aug. 19 survey of large lenders. A year ago, the rate was 4.24 percent. Four weeks ago, it was 4.12 percent.

The mortgages in this week’s survey had an average total of 0.25 discount and origination points. Over the past 52 weeks, the 30-year fixed rate has averaged 4.03 percent. This week’s rate is 0.03 percentage points higher than the 52-week average.

• The 15-year fixed-rate mortgage rose to 3.28 percent from 3.26 percent.

• The 30-year fixed-rate jumbo mortgage fell to 3.97 percent from 4 percent.

• The 5/1 adjustable-rate mortgage rose to 3.24 percent from 3.2 percent.

Economy is ‘meh’

Inflation, one of the key economic indicators that the Federal Reserve obsesses over, increased at a pace that was slower than projected. The consumer price index rose 0.1 percent from June to July, according to the Bureau of Labor Statistics.

That’s lower than the 0.2 percent increase economists were expecting, Business Insider reported Wednesday.

The economy still has soft spots, which could mean the Fed might hold off on raising rates in the near future, says Jim Sahnger, a mortgage planner at Schaffer Mortgage in Palm Beach Gardens, Fa.

“I just don’t think they’re going to be in a position to do something (in September) unless we have a really strong (August) jobs report.”

Lock and load

Mortgage applications increased 3.6 percent last week from a week prior, according to the Mortgage Bankers Association’s weekly survey. Refinances were up 7 percent, while purchases fell 1 percent.

There’s a lot of volatility in rates, so homebuyers should seriously consider locking, Sahnger says.

“If they were to go ahead and lock at application (and) take advantage of the rates that are currently in effect, they’re going to be very happy with what they have,” he says.

Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Md., agrees: “If the rate’s there where it makes sense to refinance or if you’re 30 days or less from a purchase, just lock,” he says. “There’s so much uncertainty going on in the market; I would always lock when it makes sense.”