Mortgage Rates Starting to Climb as We Approach 2016

Long-term mortgage rates in the U.S. are on the rise as we approach the start of the new year.  With more talk of the Federal Reserve raising the key short-term interest rate in the near future, mortgage rates inched upwards the first week of November.

According to Freddie Mac, 30-year, fixed-rate mortgages recently jumped up from 3.76 percent to 3.87 percent.  That’s the largest weekly increase we’ve seen in 30-year rates since early summer.  In comparison, 15-year, fixed-rate mortgages went from 2.8 percent to 3.09 percent.

Despite the rate jumps, mortgage rates are still extremely low.  For 15 weeks now, rates have been below four percent and continue to sit well lower than levels we experienced last year.  One year ago the rate for a 30-year mortgage was at 4.02 percent.  At that time a 15-year loan sat at 3.21 percent.

Already some are predicting a rate hike in the month of December.  The Fed hinted at the possibility of it happening recently, and that’s the first time that’s happened over the past seven years of record-low rates.  If we continue to see the economy growing at a fast enough pace with the addition of jobs, policymakers may take action on raising the rate at their meeting in mid December.

Already, though, the economy is seeing signs of improvement, albeit slowly.  Financial markets in places like China have calmed down, plus stocks have now recovered from nearly all the losses experienced this past summer.

With the expectation of a rate increase, yields have soared and government bond prices have decreased sharply.  When comparing the yield on a 10-year Treasury bond, it rose from 2.09 percent to 2.22 percent in just a week.

Freddie Mac takes a survey of lenders nationwide at the start of each week to come up with average mortgage rates.  This average, of course, does not take into account extra fees, or rather points.  This is what a majority of borrowers have to pay to come up with the lowest rates.  Each point is equal to one percent of the loan’s overall amount.  As for the points, the average 30-year mortgage fee increased from 0.5 percent to 0.6 percent over a week’s time.  Meanwhile, the fee stayed unchanged for a 15-year loan.

In comparison, a five-year, adjustable-rate mortgage’s average rate rose from 2.89 percent to 2.96 percent, with the fee staying steady.  The fee also held on a one-year ARM, with the average rate up from 2.54 to 2.62 percent.

Dylan Snyder is a seasoned real estate professional serving the Jupiter real estate market, Palm Beach real estate market, Palm Beach Gardens real estate market, North Palm Beach real estate market, and the surrouding Palm Beach County area. Along with being a top producer in Jupiter real estate, Dylan's professionalism and expertise in luxury and waterfront real estate sets him and his team of real estate experts apart from the competition. For more information on Jupiter and Palm Beach real estate for sale, contact Dylan at (561) 951-9301.

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