Industry News

Fixed-rate mortgages more expensive this week

Fed's recent rate cut stirs inflation worry

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Long-term mortgage rates continued higher this week on fears that the Fed's recent move to make borrowing money more affordable would tempt sellers of Treasury bonds to raise their prices, in turn stimulating inflation, according to surveys conducted by Freddie Mac and Bankrate.com. A popular misconception is that fixed mortgage rates take their cue from the actions of the Federal Open Market Committee, Bankrate.com noted. The past week is evidence that it rarely works that way. After the Fed cut short-term interest rates by a larger-than-expected half percentage point on Sept. 18, concerns about inflation began to percolate. Since inflation is the worst enemy of long-term bond investors, yields on 10-year government bonds moved higher, pushing mortgage rates -- which are closely related to those yields -- higher as well. In Freddie Mac's survey, the 30-year fixed-rate mortgage climbed to an average 6.42 percent from 6.34 percent a week ago, and the average 15-year fixed rat...