Mortgage rates rose this week as the Federal Reserve finally raised the federal funds rate from its near-zero level, where it had been for exactly 7 years.
Fed funds rate gets boost
The central banks Federal Open Market Committee increased the benchmark interest rate from a target range of 0%-0.25% to 0.25%-0.5%. However, the committee didnt outline any subsequent rate hikes.
The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate, the committees statement reads. The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.
Theres a prevailing thought that since the Fed has now implemented a rate hike that mortgage rates may fall, rather than rise, says John Stearns, senior mortgage banker at American Fidelity Mortgage Services in Milwaukee.
It will be interesting to see what happens, he says.
A look at this weeks rates
- The benchmark 30-year fixed-rate mortgage rose to 4.09% from 4.06%, according to Bankrates Dec. 16 survey of large lenders. A year ago, it was 3.94%. Four weeks ago, the rate was 4.09%. The mortgages in this weeks survey had an average total of 0.26 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 3.98%. This weeks rate is 0.11 percentage points higher than the 52-week average.
- The benchmark 15-year fixed-rate mortgage rose to 3.34% from 3.27%.
- The benchmark 30-year fixed-rate jumbo mortgage rose to 4.03% from 4.01%.
- The benchmark 5/1 adjustable-rate mortgage rose to 3.42% from 3.4%.