NEW YORK – Mortgage rates resumed their ascent this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average inched up to 4.45 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.44 percent a week ago and 4.23 percent a year ago.
The 15-year fixed-rate average ticked up to 3.91 percent with an average 0.5 point. It was 3.90 percent a week ago and 3.44 percent a year ago. The five-year adjustable rate average edged up to 3.68 percent with an average 0.4 point. It was 3.67 percent a week ago and 3.24 percent a year ago.
As expected, the Federal Reserve increased its benchmark rate Wednesday, raising it to 1.75 percent, the highest level in a decade. The central bank doesn’t set mortgage rates, but its decisions influence them.
“In light of the Fed decision, buyers should start developing contingency plans for higher mortgage rates,” said Danielle Hale, chief economist for Realtor.com. “Options are limited and hesitating to consider their financial options could mean losing out to other buyers.”
Although rising rates could put a damper on the spring home-buying season, they can also spur buyers into action. Because buyers worry that the latest increase will be the first of many, they become more desperate to buy a home right away.
“So far, U.S. housing markets remain resilient in the face of higher mortgage rates,” Len Kiefer, deputy chief economist at Freddie Mac, said in a statement. “The National Association of Realtors reported this week that existing home sales in February increased 3 percent month-over-month on a seasonally adjusted basis and are up 1.1 percent from a year ago.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found that a majority of experts it surveyed say rates will continue to rise in the coming weeks. Greg McBride, chief financial analyst at Bankrate.com, is one who predicts higher rates.
“The Fed is confident about the economy and the expectations of faster growth, and an uptick in inflation will push bond yields and mortgage rates higher,” McBride said.
Meanwhile, mortgage applications were flat again last week, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – decreased 1.1 percent from a week earlier. The refinance index fell 5 percent, while the purchase index ticked up 1 percent.
The refinance share of mortgage activity accounted for 38.5 percent of all applications.
“The refinance share of applications decreased to 38.5 percent, its lowest level since 2008, as a drop in refinance activity combined with an increase in home purchase applications over the week,” said Joel Kan, an MBA economist. “Purchase applications were 6 percent higher than the same week a year ago, as solid economic and demographic fundamentals persist.”
