Posted on 08/25/22
| News Source: Washington Post
According to data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 5.55% with an average 0.8 points. (A point is a fee paid to a lender equal to 1% of the loan amount. It is additional to the interest rate.) It was 5.13% a week ago and 2.87% a year ago. This is the fourth time in the past five weeks that the 30-year fixed average has risen or fallen by 20 basis points or more in one week. (A basis point is 0.01 percentage points.)
Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. The aggregation uses rates for high-quality borrowers, those having strong credit scores and making large down payments. Because of the criteria, these rates are not available to all borrowers.
The 15-year fixed-rate average jumped to 4.85% with an average 0.8 points. It was 4.55% a week ago and 2.17% a year ago. The five-year adjustable-rate average rose to 4.36% with an average 0.4 points. It was 4.39% a week ago and 2.42% a year ago.
“Mortgage rates tend to rise when economic data signals that the economy is strengthening,” said Holden Lewis, a home and mortgage expert at NerdWallet. “This week was the exception, as rates rose even without unambiguously positive economic news. . . . It seems that the upward push in mortgage rates comes from anxiety over Friday’s upcoming speech by Jerome Powell, chairman of the Federal Reserve. He is expected to remind listeners that the Fed will keep raising short-term interest rates until inflation succumbs.”
The yield on the 10-year Treasury spiked above 3% this week for the first time in a month, closing at 3.11% Wednesday. Yields move inversely to prices. Because mortgage rates tend to follow a path similar to that of long-term bond yields, they, too, have risen.
The bond sell-off comes as investors are waiting to see what Powell will say Friday in his speech at a conference in Jackson Hole, Wyo. They are hoping he will signal how aggressive the central bank will be in its continuing efforts to tamp down inflation. The Fed’s four rate increases this year have raised the federal funds rate to a range of 2.25 to 2.5%, the boldest set of increases in the rate since the 1980s.