By Mike Colpitts
Despite improving news on the U.S. job market, mortgage interest rates moved higher for the fourth straight week as home buyers became increasingly reluctant to make a move, according to Freddie Mac. The improvement in job gains is having little impact on the housing market.
The rate on a 30-year fixed rate mortgage rose to an average of 4.91% with 0.6 point up from 4.87% a week ago. Interest rates have been moving higher ever since turmoil increased in the Middle East and concerns about the greater world economy reached a breaking point after the disasters in Japan.
High unemployment continues to hinder the U.S. economy from improving, despite a drop in the official Bureau of Labor Statistics national average to 8.8%. Unemployment remains much higher in many regions of the country as out-sourcing over the last decade and an increase of 90-million new U.S. residents in the last 16 years hinders the nation.
Most of the U.S. economic recovery has developed on Wall Street, driving stock values higher as equities are traded by sophisticated computer algorithms by professional investors, who trade mainly for short term profits. Few housing markets troubled by the collapse of the real estate market are seeing higher home sales and only a handful are experiencing housing price inflation.
Government incentives did little to get home sales moving on a permanent basis as consumers, witnessing the further decline in home prices in most places across the U.S. became increasingly leery about the marketplace. Home values have declined more than 50% in most of the country from the markets peak.
The fixed rate 15-year mortgage averaged 4.13%, a rise from 4.10% a week ago. A year ago when the government was offering first time home buyers a tax credit to stimulate the housing market, the same loan averaged 4.40%. The higher move in mortgage rates may top the critical 5% barrier on a 30-year fixed rate loan in the near term.