Freddie Mac: Mortgage Rates Jumped In Response To The Election

Posted by Patrick Barnard on November 23, 2016 No Comments
Categories : Residential Mortgage

Mortgage rates took a significant jump during the week ended Nov. 23, with the average rate for a 30-year, fixed-rate mortgage (FRM) moving to above 4.0% for the first time in a year, according to Freddie Mac’s Primary Mortgage Market Survey.

As of Wednesday, the average rate for a 30-year FRM stood at about 4.03%, according to the report – up from 3.94% the previous week. A year ago at this time, the 30-year FRM averaged 3.95%.

The average rate for a 15-year FRM was 3.25%, up from 3.14% the previous week. A year ago at this time, the 15-year FRM averaged 3.18%.

The average rate for a five-year, Treasury-indexed, hybrid adjustable-rate mortgage (ARM) was 3.12%, up from 3.07%. A year ago, the five-year ARM averaged 3.01%.

Rates increased the previous week, as well, in response to the results of the presidential election. The average rate for a 30-year FRM increased to nearly 4.0%, due mainly to a bond sell-off that came in response to President-Elect Donald Trump’s stated goals to lower taxes, dial back regulation and make massive infrastructure investments. This bond sell-off, in turn, caused yields to rise, leading to higher rates.

This means the industry will continue to see lower application volume for refinances. However, some analysts are predicting that rates will stabilize around 4.0% in the weeks to come.

Meanwhile, the Federal Reserve has given its strongest indication yet that it will vote to raise short-term rates in December. Should the Fed gradually raise short-term rates through 2017, as is expected, mortgage rates will respond accordingly.

“In a short week leading up to the Thanksgiving holiday, the 10-year Treasury yield rose eight basis points,” says Sean Becketti, chief economist for Freddie Mac, in a release. “The 30-year mortgage rate followed suit, rising nine basis points to 4.03 percent. This increase marks the first week since 2015 that mortgage rates have risen above four percent.”

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