Average mortgage rates rise to their second highest level this year
After declining for two straight weeks, mortgage rates reversed direction this week and rose to their second highest level this year, according to Freddie Mac.
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Strong economic news, plus actions by the Federal Reserve and the European Central Bank along with the resolution of several geopolitical situations during the past week led to increases in the underlying benchmark Treasury note yields.
The 30-year fixed-rate mortgage averaged 4.62% for the week ending June 14, up from last week when it averaged 4.54%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.91%.
"The 30-year fixed-rate mortgage climbed eight basis points and the Federal Reserve Board on Wednesday raised the federal funds rate by 25 basis points," Freddie Mac Chief Economist Sam Khater said in a press release. "The good news is that the impact on consumer budgets will be smaller than past rate hike cycles. That is because a much smaller segment of mortgage loans in today's market are pegged to short-term rate movements."
The 15-year fixed-rate mortgage this week averaged 4.07%, up from last week when it averaged 4.01%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.18%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.83% this week with an average 0.3 point, up from last week when it averaged 3.74%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.15%.
"It is no surprise that the Fed continues to raise short-term rates," said the Mortgage Bankers Association's Chief Economist Mike Fratantoni in a statement. "The economy is growing quickly because of tax cuts and more government spending, the unemployment rate is at an 18-year low and inflation has picked up."
"The MBA still expects strong economic growth in 2018 and 2019, and a possible slowdown in 2020. Mortgage rates are anticipated to increase modestly, with the 30-year rate reaching 5% by the end of 2018, and 5.5% by the end of 2019," Fratantoni said.