March 24th, 2014

Fed prompts rise in mortgage rates



3-Federal-ReserveThe volatility in the mortgage market has come from several areas:

  1. Inconsistencies in the U.S. economy
  2. Foreign issues, both social and financial, in China, Russia and Crimea
  3. The Federal Reserve

While the last one might surprise you some (remember it was the Federal Reserve that originally sent mortgage rates upward last spring when the former Fed chairman spooked the markets in a post-meeting press conference), mortgage rates reacted negatively again following new Fed-head Janet Yellen’s comments after last week’s meeting, reversing a early-week trend of lower rates.

“Of course, mortgage rates follow bond yields, and after starting the week on a downward note, reversed course late Wednesday, so up we’ll again go,” wrote Keith Gumbinger, vice president, in the latest Market Trends newsletter.

Current mortgage rates

Mortgage rates only moved slightly last week:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) slipped by 0.01 percent to land at 4.43 percent for the week ending March 21
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) was unchanged at 3.55 percent
  • FHA: FHA-backed 30-year fixed-rate mortgages rose 0.03 percent, rising to 4.10 percent
  • ARM: 5/1 Hybrid ARMs fell by just 0.01 percent from last week’s total, slipping to 3.08 percent for the week ending March 21

Higher mortgage rates OK?

While our lower mortgage rate environment has allowed for some tremendous refinance and purchase opportunities, it has come at the cost of economic growth.

“We’re not advocating for higher interest rates, at least not directly, but the lowest mortgage rates often come at times of more dire economic circumstances, so relatively fewer folks can take advantage of them,” wrote Gumbinger. “Even if mortgage rates were to move higher by a full percentage point from today’s levels, they could still be counted among the best in a generation, especially if we leave out the recent period of direct Fed intervention.”

This week…

With spring underway, the busy homebuying season has begun. While we expect the spring season to start off a little slow, affordability conditions remain great and interest rates should not be a strong deterrent to buying a home.

We expect another rise in mortgage rates this week, between 0.06 percent and 0.08 percent.

Be sure to check out our 2014 spring homebuying guide

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About the HSH Blog's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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