“Average long-term US mortgage rates rose this week for the third straight week. Long-term rates have reversed the upward trend that took hold at the start of the year amid economic anxiety and market turbulence. However, rates still remain at historically low levels at the start of the spring home buying season. Freddie Mac said Thursday that the average rate on a 30-year, fixed-rate mortgage increased to 3.73% from 3.68% last week.
The average rate on a 15-year fixed-rate mortgage rose to 2.99% from 2.96% last week.
The Federal Reserve decided this week to keep a key interest rate unchanged in light of global pressures that risk slowing the US economy. As a result, Fed officials expect to raise rates more gradually this year than they had envisioned in December. The officials now foresee two, rather than four modest increases in the benchmark short-term rate during 2016.
Prices of US government bonds rose sharply after the Fed decision was announced Wednesday, reversing a decline in prices earlier int he week. The increase in bond prices pushed down the yields on the bonds, which mortgage rates track. The yield on the 10-0year Treasury bond stood at 1.91% Wednesday, down from 1.97% Tuesday but above 1.88% a week earlier. The yield was unchanged at 1.91% Thursday morning.
Lower interest rates also make stocks look more attractive to investors. In contrast to the market turbulence in the first weeks of the year, US stocks are now on track for their fifth straight week of gains and the Dow Jones Industrial Average and Standard & Poor’s 500 Index closed Wednesday at their highest levels since the first trading day of the year.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.
The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan declined to 0.4 point from 0.5 point. Rates on adjustable five-year mortgages averaged 2.93% this week.
Mortgage rates remain historically low, under 4% and even 3%, even with slight increases over the last three weeks.
30-year fixed: 3.73%
15-year fixed: 2.99%
5-year adjustable: 2.93%”
SOURCE: Freddie Mac – Associated Press