BC-glink 12/13 TMS Original

Staff Writer
Columbus CEO

REAL ESTATE MATTERS For release 12/13/13

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Higher mortgage rates reflect improving economy

Tribune Content Agency

By Ilyce Glink and Samuel J. Tamkin

Mortgage interest rates jumped last week as the economy seemed to lurch forward.

According to the weekly Freddie Mac Primary Mortgage Market Survey (PMMS), interest rates for a 30-year fixed rate loan averaged 4.46 percent, with 0.5 percent in points, up from 4.29 percent the prior week.

A year ago, the interest rate on a 30-year fixed rate mortgage averaged 3.34 percent.

Interest rates on a 15-year fixed-rate loan have similarly jumped, averaging 3.47 percent with an average 0.4 point, up from 3.30 percent a week ago. A year ago at this time, the 15-year FRM averaged 2.67 percent.

"Fixed mortgage rates increased this week following stronger than expected economic data releases," noted Frank Nothaft, vice president and chief economist at Freddie Mac.

On Thursday, the government said economic expansion in the third quarter grew at a faster rate than previously thought. The government said the economy grew at a 3.6 percent rate in the third quarter, an upward revision from the earlier estimate of 2.8 percent.

It's the best quarter for economic growth since the first quarter of 2012, when GDP grew at 3.7 percent. Other economic data released this week seemed to prove faster growth was in the works as well.

Private companies added 215,000 new jobs in November, according to the ADP employment report, well above the consensus. In addition, revisions to the employment numbers added 54,000 jobs in the prior month. Lastly, new home sales rose 25 percent in the month of October to a seasonally adjusted 444,000 annual pace, though this followed a weaker than expected September report and downward revisions over the summer months.

While the October new home sales number is a positive step, sales over July, August and September (traditionally strong months for new home building and sales) averaged only 368,000. And while the October figure returns sales to a level consistent with sales for the rest of the year, new home sales are still running at a rate that is about half of normal.

CoreLogic, a residential property information, analytics and services provider based in Irvine, Calif., said home price gains have slowed dramatically all over the country, if you factor in distressed sales. In October, home prices including distressed sales slowed to 0.2 percent. The company predicts no home price increases in November.

"In October, the year-over-year appreciation rate remained strong, but the month-over-month appreciation rate was barely positive, indicating that house price appreciation has slowed as expected for the winter," noted Mark Fleming, chief economist for CoreLogic.

"Based on our pending Home Price Index (HPI), the monthly growth rate is expected to moderate even further in November and December. The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks," he added.

(Ilyce Glink is the creator of an 18-part webinar and ebook series called "The Intentional Investor: How to be wildly successful in real estate," as well as the author of many books on real estate. She also hosts the "Real Estate Minute," on her channel. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce and Sam through her website,