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Mortgage Rates Bump Up to Three-Month High

After three months of hovering near a record low, the average 30-year fixed-rate mortgage (FRM) rose to its highest level since June on Thursday, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending September 15, 2016.

Rates for 30-year FRMs averaged 3.50 percent for the week, an increase of 6 basis points from a week earlier but still down by 41 basis points from a year ago. The average 30-year FRM has been below 3.50 percent for the past 11 weeks and below 4 percent for more than nine months.

For 15-year FRMs, the average rate bumped up by one basis point from the previous week up to 2.77 percent. A year ago, the average 15-year FRM averaged 3.11 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent for the week ending September 15, up by one basis point from the previous week but down from 2.92 percent from a year ago, according to Freddie Mac.

Even with the increase, the average 30-year FRM is still only 19 basis points above its record low of 3.31 percent set in November 2012.

“The 10-year Treasury yield rose 18 basis points to 1.73 percent, its highest level since Brexit,” said Sean Becketti, Chief Economist with Freddie Mac. “The 30-year fixed-rate mortgage followed suit, rising 6 basis points to 3.50 percent this week. This is the first week since June that mortgage rates were above 3.48 percent, snapping an 11-week trend.”

Uncertainty over whether the Federal Reserve will raise the federal funds target rate at the next policymaking meeting on September 21 has resulted in chaos for financial markets. While originally speculation was rampant following July’s policymaking meeting that a Fed rate hike would occur in September, recent mixed economic conditions have cooled predictions that the Fed will make a move this month. According to HSH.com, markets are fairly certain that the Fed will not raise rates in September but they appear to be hedging their bets just in case.

“The ‘will-they-or-won't-they’ concerns about a potential Fed move have injected volatility into the financial markets of late,” said Keith Gumbinger, vice president of HSH.com. “Yields on influential Treasury securities have risen appreciably in recent days, but so far, the effect on fixed-rate mortgages has been slight.”

In HSH.com’s Weekly Mortgage Rates Radar for the week ending September 13, the average 30-year FRM inched up by one basis point to 3.54 percent and the conforming 5/1 Hybrid ARM rates also increased by one basis point, climbing to 2.93 percent.

“The Fed made a move last December among calm markets and mixed economic data, and much of the rhetoric in recent days certainly suggests the vote to raise rates or to hold them steady will be a close one,” Gumbinger said. “Mortgage shoppers shouldn't fear, though, as the direct effect on long-term rates as the result of a move—whenever it comes—is likely to be slight. More important is how the central bank describes its intentions for future policy moves, and all indications are that lifting rates will be a long, slow process.”

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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