The good news is that average mortgage rates are still firmly in historically low territory, about 3.47 percent for the 30-year fixed this past week, says Freddie Mac.
And that’s only a little higher than the previous week’s mark of 3.42 percent. The all-time low of 3.31 percent was set four years ago.
The slight increase followed long-term U.S. Treasury yields. The movement of bonds usually is a firm indicator of whether mortgage rates will rise or fall. When yields go up, home loan rates tend to follow.
The bad news: The bond market is anticipating a Federal Reserve rate increase later this year. So Treasury prices fell this week, pushing yields to four-month highs. Investors are selling in anticipation of the Federal Reserve raising short-term rates before the end of the year. Rising oil prices also pushed up yields.
“This week the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases,” said Sean Becketti, chief economist, Freddie Mac.
The 30-year fixed-rate mortgage’s increase of 5 basis points to 3.47 percent this week was the first increase in one month, Becketti said.
“Even though we’ve seen economic activity pick up, consumer price inflation and implied inflation expectations remain below the Federal Reserve’s 2 percent target,” he said. That may keep a lid on future or significant Fed increases in the foreseeable future.
Here’s the rundown of mortgage rates for the week from Freddie Mac:
30-year fixed-rate mortgage (FRM) averaged 3.47 percent, with an average 0.6 point for the week ending October 13, 2016, up from last week when they averaged 3.42 percent. A year ago at this time, the 30-year FRM averaged 3.82 percent.
15-year FRM this week averaged 2.76 percent, with an average 0.6 point, up from last week when they averaged 2.72 percent. A year ago at this time, the 15-year FRM averaged 3.03 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week, with an average 0.4 point, up from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 2.88 percent.