Mortgage rates paused ahead of news from this week’s Federal Reserve meeting, the announcement of the nominee for the central bank’s new chairman and Friday’s employment report.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average remained at 3.94 percent with an average 0.5 point, same as it was a week ago. It was 3.54 percent a year ago.
The 15-year fixed-rate average nudged up to 3.27 percent with an average 0.5 point. It was 3.25 percent a week ago and 2.84 percent a year ago. The five-year adjustable-rate average rose to 3.23 percent with an average 0.5 point. It was 3.21 percent a week ago and 2.87 percent a year ago.
The Federal Reserve left its benchmark rate unchanged, although it signaled the potential of a hike in December. The news came too late in the week to be factored into Freddie Mac’s survey. The government-backed mortgage-backer aggregates rates weekly from 125 lenders from across the country to come up with national average mortgage rates.
One possible wrinkle is the expiration of Federal Reserve Chair Janet Yellen’s term in February. President Donald Trump nominated Jerome Powell to be the next chairman on Friday.
Many observers expect his appointment will keep the Fed on its current course. But the pending change in leadership may cause the central bank to delay the next increase in its federal funds rate.
“Based on [Wednesday’s] Fed decision and what’s likely to come in December, home-seekers should prepare for higher mortgage rates in the months ahead,” said Danielle Hale, Realtor.com’s chief economist. “It is likely that the Fed will move the Fed funds rate up at its December meeting and the Fed continues to unwind its portfolio of mortgage-backed securities, both of which are anticipated to increase mortgage rates.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed were evenly split on where rates are headed. About half said rates will rise; the other half said rates will remain relatively stable in the coming week. Brett Sinnott, vice president of capital markets at CMG Financial, is one who expects rates to climb.
“Home prices continue their ascent and have now outpaced wage increase averages,” Sinnott said. “Year-over-year data in August suggests we have not seen house prices increase at this pace since mid-2014. ... The new year will be interesting as rates and home prices generally tend not to follow the same trend line. Currently, both are increasing.”
Meanwhile, mortgage applications slumped last week, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – decreased 2.6 percent. The refinance index fell 5 percent, while the purchase index dropped 2 percent. Even though they slipped, purchase applications are almost 10 percent higher than they were last year at this time.
The refinance share of mortgage activity accounted for 48.7 percent of all applications.
