Average US rate on 30-year mortgages rises to 3.97 percent

The five-year ARM average held steady at 3.03 percent with an average 0.4 point, same as it was a week ago.

“We take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates”, Becketti said. The Fed’s benchmark interest rate has limited influence on those things.

While some New Zealand banks had a “bit of slack” in their mortgage rate pricing he said the ultra-low rate now being offered by SBS bank at 3.99 per cent “might not be around much longer”. Rates on credit cards and home equity loans and credit lines, for example, will most likely rise, though probably only slightly. And the Fed made clear it will assess the economy’s health before raising rates further.

The yield on the 10-year Treasury bond, which mortgage rates have been tracking, rose to 2.30 percent Wednesday from 2.21 percent a week earlier. Mortgage rates are closely related to yields on long-term government bonds. Their costs are usually tied to the prime rate, technically the rate banks charge their best commercial customers. Should the economy stumble, the Fed could postpone further rate increases.

“That’s quite a big move for a swap market”, he said. Rising mortgage rates ranked low among the concerns of potential home buyers, and were cited as a top concern for only 14 percent of Americans. They tend to buy when they feel financially secure or experience a major life change, such as having children. “It’s important to remember that while a hike would result in higher rates than we have been accustomed, they are still historically low”.

Last month, Doug Lewandowski moved up the closing date on a two-bedroom Chicago condo he is buying to ensure that he could lock in his rate.

Lewandowski’s outlook, if typical of prospective homeowners, is one reason many economists think home sales may rise next year even if mortgage rates tick up. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.95 percent a week ago and 3.8 percent a year ago.

Most people (70 percent) who say they are now searching for a home or plan to buy within the next year will continue with their home buying plans even if rates rise to 4.5% – roughly where economists expect they will be by mid-2016.

Most likely home buyers are aware that mortgage rates are expected to increase, and because of those rising rates, almost half of home shoppers said they would delay purchasing a home, consider buying a smaller home, or both, according to a recent Zillow survey.