Interest Rates Top 10-Month High
Feb 7th, 2018 @ 3:27 PM by Amber Nelson
After four straight weeks of increases, long-term mortgage interest rates rose to their highest point since March 2017, according to data from mortgage financier Freddie Mac, a continued sign of strength in the U.S. economy.
The average rate on a 30-year fixed-rate mortgage (FRM) grew to 4.22 percent with an average of 0.5 point during the week ended February 1, 2018, up from 4.15 percent the week before. The last time the 30-year FRM topped 4.22 percent was during the week of March 23, 2017 and it is up 0.27 percent from the beginning of this year. Rates are now higher than they were a year ago when the average was 4.19 percent.
Other interest rates are up as well. The 15-year FRM rose to an average of 3.68 percent with an average 0.5 point, an increase from 3.62 percent the previous week. One year ago, the average 15-year FRM rate was just 3.41 percent.
Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) inched up to 3.53 percent with an average 0.4 point, up from 3.52 percent a week earlier. Last year at the same time, the average rate was lower at 3.23 percent.
Increases in inflation and improvement in the labor market have led the Federal Reserve to prepare for increases in their own rate this year. All of this momentum is moving investors to action and pushing mortgage rate higher in the process.
“The Federal Reserve did not hike rates this week, but the market views future hikes as a near certainty,” said Freddie Mac deputy chief economist Len Kiefer. “The expectation of future Fed rate hikes and increased borrowing by the U.S. Treasury is putting upward pressure on interest rates.”
While the Fed did not raise rates during its January 30-31 meeting, if positive economic trends continue there is a very good chance that it will increase its rate when it meets again March 20-21.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.