Mortgage rates drop on weak labor news

The average 30-year fixed-rate mortgage stood at 5.7 percent this week, down from 5.8 percent last week, according to Freddie Mac’s Primary Mortgage Market Survey.

“Responding to a weak labor market report that showed November job growth to be far less than had been anticipated, long-term yields – and that includes mortgage rates – reversed last week’s hike and fell to the previous week’s level,” said Frank Nothaft, Freddie Mac vice president and chief economist. “However, many other indicators remain strong and this we think will lead the Federal Open Market Committee to raise short-term rates another quarter point to a target of 2.25 percent, putting upward pressure on frequently-adjusting ARMs (adjustable-rate mortgages).”

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