Looking at this week’s average mortgage rates and a disturbing possibility…
I will discuss the disturbing possibility AFTER looking at the average mortgage rates reported by the MBA, Freddie Mac and Bankrate for this week!
Freddie Mac on Mortgage Rates:
Sadly Freddie Mac reported INCREASES:
- 30 year fixed-rate mortgages averaged 3.64%
- Last week, 30 year fixed-rate mortgages averaged 3.58%
- Last year at this time, 30 year fixed-rate mortgages averaged 3.87%
- 15 year fixed-rate mortgages this week averaged 2.89%
- Last week, 15 year fixed-rate mortgages averaged 2.81%
- Last year at this time, 15-year fixed-rate mortgages averaged 3.11%
Check out the chart from Freddie Mac:
Sean Becketti, chief economist, Freddie Mac said:
US Treasury yields moved up in response to the Fed minutes release, which kept alive the possibility of a summer rate-hike. Mortgage rates followed, with the 30-year fixed-rate mortgage increasing 6 basis points to 3.64 percent. Despite this increase, May ends the month averaging only 3.60 percent, 1 basis point below April’s average, and the lowest monthly average in 3 years. Homebuyers are taking advantage of these historically low rates with April’s new-home sales increasing by 16.6 percent, the fastest pace since January 2008.
Well I guess the cat is out of the bag about the disturbing possibility. It appears that the Fed may start raising their benchmark rate.
Bankrate on Mortgage Rates:
Bankrate.com also reported increases this week:
The average 30 year fixed rate mortgages increased to 3.82% from 3.76%
The average 30 year fixed rate jumbo mortgages increased to 3.84% from 3.78%
The average 15 year fixed rate mortgage decreased to 3.06% from 2.98%
The MBA on Mortgage Rates:
The MBA reported:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) was 3.85% for 80% loan-to-value ratio (LTV) loans. This is up from the 3.82% reported last week.
The average contract interest rate for 30 year fixed rate mortgages with jumbo loan balances (greater than $417,000) was 3.82% for 80% LTV loans. This is up from the 3.74% reported last week.
The average contract interest rate for 15 year fixed rate mortgages was 3.06% for 80% LTV loans. This is up from the 3.02% reported last week.
The Take Away:
I guess after seeing all of the average mortgage rose this week that you have figured out what the dire possibility is I mentioned earlier…
I am sure lots of people are freaking out…
Should you actually be concerned about the Fed raising their benchmark rate?
The economy is doing better and several members of the Fed have said they are getting closer to raising the benchmark rate. Their next meeting is June 14 and that is the earliest the Fed could act.
The increase we saw this week is just the market reacting to the POSSIBILITY of the Fed raising rates. If the economy and the labor market keeps improving, we could see higher rates in several weeks.
Sadly, we do not know for sure what the Fed may do or when. Even Yellen is not saying anything too specific:
It’s appropriate — and I’ve said this in the past — for the Fed to gradually and cautiously increase our overnight interest rate over time. Probably in the coming months such a move would be appropriate.
Remember the Fed does NOT directly set mortgage rates. But the last time they raised their benchmark rate, it caused mortgage rates to increase dramatically.
There are other factors that can and will affect mortgage rates, such as rising inflation or investors seeking someplace safe to park their money because of economic turmoil.
Which means that we must keep an eye on the economy. So let’s look at what happened this week:
- S&P 500 had best week since February
- Q1 GDP was revised up
- UofM Consumer sentiment still good
- Jobless claims fell
- Pending home sales and new home sales both reported as stronger
It is hard, if not impossible, to predict what the Fed will do.
When we keep seeing lots of good news such as this week after week, it is only a matter of time before mortgage rates rise.
If it makes sense for you to buy a home today, I would NOT drag my feet.
Limited inventory, rising home prices and the possibility that mortgage rates will increase could cost you money!
The Fine Print: As always, I am providing this to you for informational purposes only! I am a blogger and REALTOR in Anderson SC and not a mortgage lender. You should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products. My suggestion is that ALL serious legitimate buyers take the first step and talk with a mortgage professional.