Home loan rates began moving higher after the Federal Reserve signaled last week that a December interest rate hike was a possibility. What the Fed does with interest rates doesn’t have a direct relationship to mortgage rates since they are more closely tied to long-term U.S. Treasury yields. Bonds are more likely to move ahead of a Fed action than in response to it.
Still, a lot can happen before the Dec. 16 Fed meeting that could affect home loan rates. Friday’s monthly jobs report could not only strengthen or lessen the chances of a Fed rate hike, it also could have an impact on mortgage rates.
The 15-year fixed-rate average climbed to 3.09 percent with an average 0.6 point, rising above the 3 percent mark for the first time in three weeks. It was 2.98 percent a week ago and 3.21 percent a year ago.
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Hybrid adjustable rate mortgages also rose. The five-year ARM average grew to 2.96 percent with an average 0.4 point. It was 2.89 percent a year ago and 2.97 percent a year ago.
The one-year ARM average increased to 2.62 percent with an average 0.2 point. It was 2.54 percent a week ago.
“Treasury yields climbed nearly 20 basis points over the past week, capturing the market movement following last week’s [Federal Open Market Committee] meeting,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“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.”
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Meanwhile, mortgage applications were flat this week, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume – slipped 0.8 percent from the previous week. The refinance index dropped 1 percent, while the purchase index decreased 1 percent.
The refinance share of mortgage activity accounted for 59.7 percent of all applications.