Fed Prompts Rise in Mortgage Rates

The volatility in the mortgage market has come from several areas:

  1. Inconsistencies in the U.S. economy
  2. Foreign issues, both social and financial, in China, Russia and Crimea
  3. The Federal Reserve

While the last one might surprise you some (remember it was the Federal Reserve that originally sent mortgage rates upward last spring when the former Fed chairman spooked the markets in a post-meeting press conference), mortgage rates reacted negatively again following new Fed-head Janet Yellen's comments after last week's meeting, reversing a early week trend of lower rates.

"Of course, mortgage rates follow bond yields, and after starting the week on a downward note, reversed course late Wednesday, so up we'll again go," wrote Keith Gumbinger, HSH.com vice president, in the latest Market Trends newsletter.

Current mortgage rates
Mortgage rates only moved slightly last week:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) slipped by 0.01 percent to land at 4.43 percent for the week ending March 21
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) was unchanged at 3.55 percent
  • FHA: FHA-backed 30-year fixed-rate mortgages rose 0.03 percent, rising to 4.10 percent
  • ARM: 5/1 Hybrid ARMs fell by just 0.01 percent from last week's total, slipping to 3.08 percent for the week ending March 21

Higher mortgage rates OK?
While our lower mortgage rate environment has allowed for some tremendous refinance and purchase opportunities, it has come at the cost of economic growth.

"We're not advocating for higher interest rates, at least not directly, but the lowest mortgage rates often come at times of more dire economic circumstances, so relatively fewer folks can take advantage of them," wrote Gumbinger. "Even if mortgage rates were to move higher by a full percentage point from today's levels, they could still be counted among the best in a generation, especially if we leave out the recent period of direct Fed intervention."

This week...
With spring under way, the busy homebuying season has begun. While we expect the spring season to start off a little slow, affordability conditions remain great and interest rates should not be a strong deterrent to buying a home.

We expect another rise in mortgage rates this week, between 0.06 percent and 0.08 percent.

The original article: Fed prompts rise in mortgage rates appeared on HSH.com

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Additional mortgage articles can be found on HSH.com.

The documents you need to apply for a mortgage

FHA loans still offer advantages in 2014

Current FHA mortgage rates

The article Fed Prompts Rise in Mortgage Rates originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story