Mortgages Climb to High Last Seen in July

Mortgage interest rates climbed to a four-month high this week, amid turmoil in Europe's financial markets and in anticipation of Friday's government report on U.S. payrolls.

Mortgage rates for Dec. 2, 2010

The benchmark 30-year fixed-rate mortgage rose 13 basis points this week, to 4.71%, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 5.01%; four weeks ago, it was 4.42%.

The benchmark 15-year fixed-rate mortgage rose 10 basis points, to 4.07%. The benchmark 5/1 adjustable-rate mortgage rose 8 basis points, to 3.74% and the benchmark 30-year fixed jumbo rate rose 11 basis points, to 5.29%.

Weekly national mortgage survey

Results of Bankrate.com's Dec. 1, 2010, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

30-year fixed 15-year fixed 5-year ARMThis week's rate: 4.71% 4.07% 3.74%Change from last week: +0.13 +0.1 +0.08Monthly payment: $856.74 $1,226.28 $763.20Change from last week: +$12.85 +$8.27 +$7.46

What would the monthly payment be for you? Use Bankrate's mortgage calculator to find out.In Bankrate's weekly survey, the 30-year fixed rate hasn't been this high since July 28, when it equaled this week's rate, at 4.71%.

Ireland may seem far away indeed from U.S. home-loan borrowers, but it's not hard to connect the dots from the Emerald Isle's economic crisis to mortgage interest rates.Bad news, whether national or international, sends money to "the safest port in the storm," says Peter Thompson, a senior loan officer with Prospect Mortgage in Naperville, Ill. As investors' uncertainty increases the demand for U.S. Treasuries and U.S. mortgage bonds, interest rates tend to drop. That was the trend late last week and early this week.But by midweek -- in mortgage markets, at least -- the problems in Ireland were small potatoes compared to developments on this side of the Atlantic.

Jobs report

Now, rate-watchers are looking forward to the U.S. employment numbers, due out Friday from the federal Bureau of Labor Statistics. The monthly jobs report might be unexpectedly rosy, if it follows the trajectory of a survey released Wednesday morning by the payroll processor ADP. According to ADP, private employment increased by 93,000 jobs in November. That was an unexpectedly large increase, and the biggest in ADP's survey in eight months. The rate trend reversed.

A strong rebound in job creation could suggest a strengthening economy, sparking new fears of inflation and concerns about the Federal Reserve's purchases of U.S. Treasuries, the so-called quantitative easing, or QE2. Those fears could add upward pressure on mortgage rates.The government's employment situation update will be the "big report that will move the market," Thompson predicts.

John Walsh, president of Total Mortgage Services in Milford, Conn., also has a close watch on the nonfarm payroll figures, which, he says, could be "a big decider on the direction of interest rates for the coming week."

If the employment report shows strong jobs growth and the benchmark interest rate on U.S. Treasuries subsequently crosses the 3% level, he suggests, "all bets are off" on mortgage rates.

Lock now

Borrowers may want to take a conservative path in light of the rate market's uncertainty and volatility, mortgage brokers suggest.

Thompson urges borrowers to lock an interest rate before Friday morning."It's rarely a good idea to float into the unemployment number because you don't know what that's going to be, and there have been a lot of signs just recently that the economy is starting to show that it's picking up a little bit," he says.

Walsh's advice for borrowers is to refinance their existing mortgage now, if the numbers make sense, rather than wait for lower rates that may not materialize. The risk, he says, is not only the loss of an attractive rate today, but also that loan guidelines will continue to tighten and property values may remain flat or drop further.

"Someone who qualified today may not qualify tomorrow," he says.