This is a syndicated repost courtesy of Confounded Interest – Online Course Notes for Financial Markets. To view original, click here. Reposted with permission.
Freddie Mac’s 30 year committment rate keeps rising and … The Federal Reserve has an 88.7% probability of raising rates AGAIN in March.
(Mortgage Orb) Mortgage rates increased significantly during the week ended Jan. 25, with the average rate for a 30-yer fixed-rate mortgage (FRM) jumping to 4.15%, up from 4.04% the previous week, according to Freddie Mac’s Primary Mortgage Market Survey.
A year ago at this time, the average rate for a 30-year FRM was 4.19%.
It was the third consecutive week that the average rate increased.
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The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 3.52%, up from 3.46% A year ago at this time, the five-year ARM averaged 3.20%.
“Rates keep climbing,” says Len Kiefer, deputy chief economist for Freddie Mac, in a release. “The 10-year Treasury yield reached its highest point since 2014 reflecting expectations of broad-based economic growth. Mortgage rates, in turn, followed the surge in Treasury yields. The 30-year fixed rate mortgage jumped 11 basis points to 4.15 percent, its highest level since March of last year.
“The release of the December existing home sales data confirms that 2017 was the best year for home sales in over a decade,” Kiefer adds. “Will 2018 home sales outpace 2017? Homebuyer affordability will be a challenge, with mortgage rates moving higher and robust house price gains across the country. The FHFA reported that house prices increased 6.5 percent from November 2016 to November 2017, with all regions showing positive 12-month changes.”
The spread between the Freddie Mac 30 year committment rate and the 10-year Treasury yield has been shrinking compared to 2016.
Let’s see what happens to mortgage purchase applications next week.
The WIRP (World Interest Rate Probability) indicates no rate increase for the January FOMC meeting, but an 88.7% chance of a rate increase at the March FOMC meeting.
And the SS Fed is sailing into higher interest rate waters.
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