Mortgage markets worsened again last week as belief in a U.S. recovery and concerns for inflation took hold on Wall Street. Conforming mortgage rates rose for the 6th straight week.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is 0.66% higher this week as compared to rates on November 11, but loan originators will tell you that figure is understated.
Real mortgage rates — mortgage rates available to everyday homeowners and buyers are up by as much as a full percentage point since November, and loan costs are rising, too.
The Refi Boom of 2010 is over.
Last week, mortgage markets revolved around the Federal Open Market Committee. The FOMC met Tuesday and voted to leave the Fed Funds Rate unchanged within a target range of 0.000-0.250. This was expected. However, markets seemed to be surprised by the Fed’s take on inflation.
In its press release, the Fed said inflation is running too low to benefit the economy. Its policies, including the group’s $600 billion bond market program, may be meant to spark inflation, then. This would lead mortgage rates higher and Wall Street knows it.
Mortgage rates spiked after the Fed adjourned.
This week, with a sparse data schedule and trade volume thinning because of holidays, expect mortgage rates to be volatile.
Although rates are higher since 7 weeks ago, they remain low, historically. There’s still a chance to capitalize on the lowest mortgage rates in decades. If you haven’t refinanced this year and want to know what’s available, talk to your loan officer right away.