After remaining almost stationary for the past two months, long-term mortgage interest rates jumped the most of any one week this year, according to mortgage giant Freddie Mac, a product of market speculation about the Federal Reserve’s actions.
“Fixed-rate mortgage rates rose this week following the increase in 10-year Treasury yields being partially fueled by market speculation the Federal Reserve might change its interest rate guidance,” commented Freddie mac vice president and chief economist Frank Nothaft in a statement .
The average rate on a 30-year fixed rate mortgage leaped to 4.23 percent, excluding points, during the week ended September 18, up from 4.12 percent the week before. Even with this week’s jump, rates are still considerably lower than one year ago when the average was 4.50 percent. Before this week, the average rate has stayed in a very tight range between 4.10 percent and 4.14 percent since the middle of July.
Even though it plans to hold its target interest rate near zero for a “considerable time,” the Federal Reserve announced Wednesday that it will keep its October deadline for ending its stimulus program. It has been tapering the program by $10 billion every six weeks for most of the year so far. That message from the Fed as well as several positive signs from the greater economy encouraged investors to leave the security of bonds, pushing rates higher finally.
Rates on 15-year fixed rate loans also skyrocketed in the latest week, with the average climbing to 3.37 percent, up from 3.26 percent. Compared with the previous year, rates are down from 3.54 percent. The one-year adjustable rate mortgage carried an average rate of 2.43 percent, falling from 2.45 percent the week before and down from last year’s 2.65 percent.