Long-term mortgage interest rates grew to their highest level in six weeks, according to mortgage guarantor Freddie Mac, in reaction to the Federal Reserve’s suggestion of a rate increase in December.
The average rate on a 30-year fixed rate mortgage (FRM) jumped to 3.87 percent, excluding fees, during the week ended November 5, 2015, up from 3.76 percent the week before and the highest since the week of September 17. The new rate is still lower than the same time last year though when it averaged 4.02 percent.
Although the Fed did not see enough evidence of economic growth to raise interest rates at its meeting last week, there were enough positive signs to promise a real chance of pushing rates higher around Christmas time.
“Treasury yields climbed nearly 20 basis points over the past week, capturing the market movement following last week’s FOMC meeting,” said Freddie Mac chief economist Sean Becketti. “In response, the 30-year mortgage rate experienced its largest increase since June, up 11 basis points to 3.87 percent. Recent commentary suggests interest rates may rise in the near future. Janet Yellen referred to a December rate hike as a ‘live possibility’ if incoming information supports it. The October jobs report to be released this Friday will be one crucial factor influencing the FOMC’s decision.”
Fifteen-year FRMs also increased in the latest week to an average of 3.09 percent, up from 2.98 percent and also a six-week high. Compared with the year before, rates are down from 3.21 percent.
Adjustable rate mortgages, whose rates usually move conversely to fixed rates, actually saw rate jump as well. The one-year ARM rate averaged 2.62 percent, up from 2.54 percent the previous week and up from last year’s 2.45 percent.