Average fixed-rate mortgages edged higher this week to the highest average in two years as speculation mounts that the Fed will soon taper its bond purchase program.
The Fed’s bond-buying program had been keeping mortgage rates at or near all-time lows in recent months. But as the economy improves, the Fed has indicated that it will soon taper its program, which will likely send rates higher.
The Federal Reserve released its monetary policy committee minutes for July this week, which indicated broad support among members to start reducing its bond purchase program later this year.
"Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates,” says Frank Nothaft, Freddie Mac’s chief economist. “In fact, existing-home sales increased in July to the strongest pace since November 2009 and home builder confidence in August rose to its highest reading since November 2005. Both increases occurred after mortgage rates had risen from their spring-time lows."
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 22:
- 30-year fixed-rate mortgages: averaged 4.58 percent, with an average 0.8 point, rising from last week’s 4.40 percent average. A year ago at this time, 30-year rates averaged 3.66 percent.
- 15-year fixed-rate mortgages: averaged 3.60 percent, with an average 0.7 point, rising from last week’s 3.44 percent. Last year at this time, 15-year rates averaged 2.89 percent.
- 5-year adjustable-rate mortgages: averaged 3.21 percent, with an average 0.5 point, dropping from last week’s 3.23 percent average. Last year at this time, 5-year ARMs averaged 2.80 percent.
- 1-year ARMs: averaged 2.67 percent, with an average 0.5 point, holding the same as last week. A year ago, 1-year ARMs averaged 2.66 percent.
Source: Freddie Mac