US Mortgage Rates Rise on the Hot January US Jobs Report

In the week ending February 9, mortgage rates rose for the first time in five weeks. 30-year fixed mortgage rates increased by three basis points to 6.12%.

Following the latest increase, 30-year fixed rates are up 113 basis points from the August 3 most recent low of 4.99%. 30-year fixed rates were up 243 basis points year-over-year.

Economic Data from the Week

US economic indicators supported the pickup in US mortgage rates, with a hot US Jobs Report for January delivering a shift in sentiment toward the US economy and Fed monetary policy.

According to the ISM-based service sector survey, a return to growth across the services sector also supported the expectation of a more hawkish Fed.

However, Fed Chair Powell delivered a less hawkish-than-expected speech last Tuesday to limit the impact of the Jobs Report on mortgage rates.

Investors had no major economic indicators to consider in the first half of the week.

Freddie Mac US Mortgage Rates

The weekly average rates for new mortgages, as of February 9, 2023, were quoted by Freddie Mac to be:

• 30-year fixed rates rose by three basis points to 6.12%. This time last year, rates stood at 3.69%.
• 15-year fixed rates increased by 11 basis points to 5.25%. Rates were up by 232 basis points from 2.93% a year ago.

According to Freddie Mac,

• Mortgage rates increased last week, with the Fed rate hike and the hot US jobs report pushing rates higher.
• Following the recent pullback in mortgage rates, homebuyers are returning to the market in time for the spring homebuying season.

Mortgage Bankers’ Association Rates

For the week ending February 3, 2023, the rates were:

• Average interest rates for 30-year fixed with conforming loan balances decreased from 6.19% to 6.18%. Points fell from 0.65 to 0.64 (incl. origination fee) for 80% LTV loans.
• Average 30-year fixed mortgage rates backed by FHA decreased from 6.18% to 6.14%. Points declined from 0.99 to 0.88 (incl. origination fee) for 80% LTV loans.
• Average 30-year rates for jumbo loan balances fell from 5.99% to 5.96%. Points rose from 0.48 to 0.55 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, jumped by 7.4%. The Index slid by 9.0% in the previous week.

The Refinance Index surged by 18% and was 75% lower than the same week one year ago. In the previous week, the Refinance Index declined by 7%.

The refinance share of mortgage activity increased from 31.2% to 33.9%. In the previous week, the refinance share fell from 31.9% to 31.2%.

According to the MBA,

• A fifth consecutive weekly fall in mortgage rates supported a rise in mortgage applications.
• Purchases and refinance applications rose, though overall applications remain 58% lower than one year ago, with rates elevated.
• Strong labor market conditions and supportive demographics continue to support demand for housing after a hold in 2022.
• The average loan size on a purchase application rose to $428,500, the highest since May 2022.

For the week ahead

It is a busy week ahead on the economic calendar. The US CPI Report for January will be the focal point in the first half of the week. Following the hot US Jobs Report and hawkish Fed chatter, a pickup in inflationary pressure would support a more aggressive Fed interest rate trajectory to bring inflation to target.

Retail sales figures will also draw interest on Wednesday.

From the second half of last week, post-Powell speech Fed chatter and the Michigan Consumer Sentiment Index and sub-component numbers from Friday support another pickup in mortgage rates.

FOMC member chatter will also need consideration, with reaction to the US CPI report likely to be the key.