Mortgage rates nudge upward
By Holden Lewis • Bankrate.com

The benchmark 30-year fixed-rate mortgage rose 6 basis points to 6.00 percent, 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 6.18 percent.

The 15-year fixed-rate mortgage rose 7 basis points to 5.32 percent. The one-year adjustable-rate mortgage rose 4 basis points to 4.01 percent.

The small rise in mortgage rates was somewhat of a surprise, considering last week's news that the economy grew at an annual rate of 7.2 percent from July through September. It was the biggest quarterly jump in the nation's economic output since the 1980s, and exceeded most economists' estimates. The consensus among economists had been that GDP rose at an annual rate of 6 percent.

Normally, you might expect long-term interest rates to rise on such news. Not this time -- at least, not by much.

"One of the things about GDP numbers is they really aren't surprises, because we already had that data," says Dean Baker, an economist and co-director for the Center for Economic Policy Research.

Baker explains that information about consumption, retail sales and imports and exports in the third quarter was largely already known. People "knew that number was going to be somewhere around 6 percent," Baker says. "It wasn't hugely higher. I think the markets, for the most part, had taken it into account."

The next big item of information, coming out Friday, concerns employment in October. The government will calculate October's unemployment rate. Perhaps more importantly, it will estimate how many net jobs the economy gained or lost in October. The economy gained 57,000 jobs in September, the first gain since January, and many economists expect a similar gain in October.

Does the market suspect that the employment news won't be so rosy? Maybe. That might explain partly why rates didn't shoot upward on the GDP news. Or maybe the bond and mortgage markets are just waiting -- poised to launch on good news.

Most economists expect the economy to cool down slightly in the final three months of the year, to a 4 percent annual growth rate. That's roughly how fast the economy needs to grow if the unemployment rate is to fall while inflation remains low. Baker doesn't think the economy will grow that fast. Vehicle sales slowed in October, and the pace of layoffs increased.

Few economists are as pessimistic. "More than 50,000 new jobs were created in September," writes Charles Lieberman, chief economist for Advisors Financial Center, in a weekly commentary. "That should be just the beginning of the job growth for this economic cycle."

House hunters appear optimistic. The number of mortgage applications nationwide rose 5.5 percent last week, according to the Mortgage Bankers Association. Most of that rise came from an 11 percent jump in loan applications for home purchases. The number of applications for refinances was almost flat.