Long-term mortgage interest rates moved up in the latest week, according to mortgage guarantor Freddie Mac, but with the Fed unsure of its own rate direction for 2015 there may be fewer mortgage rate increases through the end of the year.
The average rate on a 30-year fixed rate mortgage (FRM) rose to 3.82 percent, excluding fees, during the week ended October 15, 2015, up from 3.76 percent the week before. The new rate is down compared with the previous year when it averaged 3.97 percent.
The 15-year FRM carried an average rate of 3.03 percent, up from 2.99 percent last week, but down from 3.18 percent during the same week of 2014.
The one-year adjustable rate mortgage (ARM) rate slipped to 2.54 percent, down from 2.55 percent the week before, but up from 2.38 percent a year earlier.
“As the shock of the weak September employment report wore off, Treasury rates drifted higher,” said Freddie Mac chief economist Sean Becketti. “In response, the 30-year mortgage rate climbed 6 basis points to 3.82 percent, marking 12 consecutive weeks below 4 percent. Late-breaking news suggests mortgage rates may remain in this territory a while longer. After this week’s survey closed, Federal Reserve Governor Daniel Tarullo was quoted suggesting the Fed may not act this year, and Wednesday the 10-year Treasury closed under 2 percent in reaction to economic releases indicating weak consumer demand.”
Although Federal Reserve Chairperson Janet Yellen has consistently said the Fed will raise its target interest rate before the end of 2015, voting board member Tarullo told a CNBC broadcaster in an interview this week that he is not in agreement with that plan. “Given where I think the economy would go, I wouldn’t expect it would be appropriate to raise rates,” he said.
Tarullo is not the only voting governor to voice dissension. Fed Governor Lael Brainard has said it would be prudent to wait and watch and Vice Chairman Stanley Fischer recently said that a Fed rate hike is just “an expectation, not a commitment.”