Mortgage rates increased for the second week in a row as the Federal Reserve decided to raise short-term interest rates for the first time in nearly a decade, according to the Freddie Mac Primary Mortgage Market Survey.
The average 30-year fixed-rate mortgage lifted this week to 3.97% from 3.95% the previous week, Freddie Mac said in a Dec. 17 news release. This figure stood 17 basis points higher than during the same period in 2014.
Additionally, rates for both 15-year fixed-rate and one-year Treasury-indexed adjustable-rate mortgages rose 3 basis points from a week ago, to 3.22% and 2.67%, respectively. Last year, the 15-year FRM averaged 3.09%, while the rate for the one-year Treasury-indexed ARM was at 2.38%.
The five-year Treasury-indexed hybrid ARM was alone in not increasing from the previous week, holding steady at 3.03%. Despite not changing week-to-week, this figure was still well above last year's average of 2.95%.
Looking ahead, Freddie Mac chief economist Sean Becketti said that he trusts the Federal Reserve will keep true to its word that rates will be increased gradually. Overall, this will put a slight damper on refinance activity, he said in the news release.
"We take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates," Becketti said. "Mortgage rates will tick higher but remain at historically low levels in 2016. Home sales will remain strong, but refinance activity should cool somewhat."
