Mortgage rates edged up this week after the Federal Reserve decided it would not cut its key interest rate in the face of inflation worries, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage rose to an average 6.4 percent, up from 6.36 percent last week, while the 15-year fixed-rate mortgage inched up to an average 6.1 percent from last week’s 6.06 percent.
Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) this week averaged 6.14 percent, with an average 0.6 point, up from last week when it averaged 6.11 percent. The one-year Treasury-indexed ARM averaged 5.6 percent with an average 0.7 point, up from last week when it averaged 5.57 percent.
“At it’s most recent meeting, the Federal Reserve again declined to raise rates for the third time, citing a slowdown in the housing market,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. “For instance, the median price of both new and existing homes in September posted significant decreases. And some areas of the country may experience a few bumps up and down as the housing industry corrects itself in the coming months.
“On a positive note, new-home sales in September came in at a higher-than-expected pace, while the number of homes for sale on the market dropped. This should help support housing prices going forward.”
In Bankrate.com’s survey, mortgage rates climbed to a two-month high as hopes of any imminent Fed rate cuts were dashed. The average 30-year fixed mortgage rate moved higher to 6.46 percent, the highest since Aug. 29, and had an average of 0.35 discount and origination points.
The average 15-year fixed-rate mortgage popular for refinancing increased to 6.16 percent, up from 6.1 percent last week, according to Bankrate.com. On larger loans, the average jumbo 30-year fixed rate stepped up to 6.7 percent. Adjustable rate mortgages were also on the rise, with the average 5/1 ARM gaining to 6.28 percent and the average one-year ARM climbing to 5.99 percent.
Bankrate.com said members of the Federal Open Market Committee have talked tough on inflation in recent weeks, and a two-day meeting on Oct. 24-25 raised fears of further jawboning. While the post-meeting statement contained only subtle wording adjustments, the Fed has removed any likelihood of rate cuts coming soon. Bond yields and mortgage rates have increased as this realization has taken hold. Mortgage rates are closely related to yields on long-term government bonds.
Fixed mortgage rates remain nearly one-half percentage point below the June peak, Bankrate.com reported. At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.46 percent, the same loan originated today would carry a monthly payment of $1,039.
The following is a sampling of Bankrate.com’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:
New York – 6.45 percent with 0.14 point
Los Angeles – 6.53 percent with 0.48 point
Chicago – 6.59 percent with 0.04 point
San Francisco – 6.46 percent with 0.51 point
Philadelphia – 6.39 percent with 0.45 point
Detroit – 6.57 percent with 0.03 point
Boston – 6.49 percent with 0.18 point
Houston – 6.41 percent with 0.57 point
Dallas – 6.43 percent with 0.5 point
Washington, D.C. – 6.31 percent with 0.61 point