Freddie Mac: Mortgage rates start to move higher

Fed Chair Janet Yellen on Wednesday echoed the statement in comments she made before Congress, calling a hike in December “a live possibility”. What the Fed does with interest rates doesn’t have a direct relationship to mortgage rates since they are more closely tied to long-term U.S. Treasury yields. 5 year FHA Adjustable Rate Mortgages are listed at 3.375% with an April of 3.631%.

“That said, while the majors all raised their rates in October, most of the higher rates won’t come into effect until November 20”.

The average three-year fixed rate has also fallen from 3.1% in September to 3.08% in October.

In spite of renewed speculation around a base rate rise next year, MoneySuperMarket has found fixed term mortgage rates have crept down to a few of their lowest ever levels again.

According to Mortgage Choice, fixed rate loans accounted for only 13.88% of all home loans written through October.

Mortgage giant Freddie Mac says the average rate on a 30-year fixed-rate mortgage jumped to 3.87 per cent from 3.76 per cent a week earlier.

The average contract interest rate for 5/1 ARMs increased to 3.12 percent from 3.03 percent, with points decreasing to 0.25 from 0.34 (including the origination fee) for 80 percent LTV loans. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The 11-basis point rise – a basis point is 0.01 percentage point – was the biggest one-week spike since June.

Homebuyers who locked in mortgage rates this week rather than last week are probably kicking themselves.

“Treasury yields climbed almost 20 basis points over the past week, capturing the market movement following last week’s FOMC meeting”.

David Hollingworth, a spokesman for broker London and Country Mortgages, said he has seen signs of lenders sharpening up their rates in recent weeks across all deposit sizes. The rates started to move after the Federal Reserve signaled the possibility that it could raise rates in December.

Meanwhile, mortgage applications were flat this week, according to the latest data from the Mortgage Bankers Association.

The market composite index – a measure of total loan application volume – slipped 0.8 percent from the previous week.