The Ups and Downs of Mortgage Rates

Prior to the Federal Reserve’s decision to raise mortgage rates, they were already ticking up without any additional help.

Mortgage interest rates made a significant jump from November 2015 to December 2015, according to the Federal Housing Finance Agency (FHFA). Interest rates on conventional purchase-money mortgages rose 12 basis points from 3.85 percent to 3.97 percent in December.

The FHFA reported that the average interest rate on all mortgage loan increased by 10 basis points from 3.86 percent to 3.96 percent in December 2015.

For conventional, 30-year, fixed-rate mortgages of $417,000 or less, the average interest rate was 4.20 percent in December, up 12 basis points from 4.08 in November.

The FHFA reported that the effective interest rate, which accounts for the addition of initial fees and charges over the life of the mortgage, on all mortgage loans was 4.10 percent in December, up 9 basis points from 4.01 percent in November.

In December, the average loan amount for all loans was $318,000, down $1,800 from $319,800 in November, the FHFA said.

Freddie Mac reported in its Primary Mortgage Market Survey (PMMS) that the 30-year fixed-rate mortgage rate fell 0.6 percentage points from 3.81 percent to 3.79 percent for the week ending January 28, 2016, as the Fed kept interest rates at their current level in its Federal Open Market Committee meeting. A year ago at this time, the 30-year FRM averaged 3.66 percent.

The 15-year FRM averaged 3.07 percent with an average 0.5 point for the week, down from 3.10 percent last week and up from last year when it averaged 2.98 percent.

According to Freddie Mac, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent this week with an average 0.5 point, down from last week when it averaged 2.91 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

"The yield on the 10-year Treasury stabilized around 2 percent this week, and the 30-year mortgage rate dipped 2 basis points to 3.79 percent," said Sean Becketti, Chief Economist, Freddie Mac. "The recent market turmoil has given the Fed pause; as was universally expected, the Fed stood pat this week but kept its options open for a rate increase in March. This week's housing releases confirmed the momentum of home sales going into 2016. A hesitant Fed, sub-4-percent mortgage rates (at least for a little while longer), and strong housing fundamentals should generate a three percent increase in home sales this year."