Interest rates

Mortgage rates end the year roughly where they were

After falling last week, mortgage rates have returned to their levels of the past two months.

According to the latest data released Thursday by Freddie Mac, the average fixed rate over 30 years rose to 3.11% with an average of 0.7 points. (A point is a commission paid to a lender equal to 1% of the loan amount.

It is added to the interest rate.) It was 3.05% a week ago and 2.67% a year ago.

Aside from last week and the week in November when it fell to 2.98%, the 30-year fixed average has hovered around 3.1% over the past eight weeks.

Freddie Mac, the federally chartered mortgage investor, aggregates the rates of about 80 lenders across the country to establish weekly national averages.

The survey is based on mortgage loans for the purchase of a home. Refinancing rates may be different.

It uses rates for high quality borrowers with strong credit scores and large down payments.

Due to the criteria, these rates are not available to all borrowers.

The 15-year fixed rate average climbed to 2.33% with an average of 0.7 points. It was 2.3% a week ago and 2.17% a year ago.

The average of the five-year revisable rates rose to 2.41% with an average of 0.5 points. It was 2.37% a week ago and 2.71% a year ago.

“Mortgage rates have indeed moved sideways despite the increase in new cases of covid,” Sam Khater, chief economist at Freddie Mac, said in a statement. “This is because incoming economic data suggests the economy remains on solid footing, especially cyclical industries like manufacturing and housing.

“In addition, low interest rates and high asset valuations continue to stimulate consumer spending.”

The 10-year Treasury yield, which had hovered below 1.5% for much of December, hit its highest in one month on Wednesday. It closed at 1.55%.

Mortgage rates tend to follow the same path as long-term bond yields, although this has been less the case recently due to the Federal Reserve’s intervention in the market.

Yields increase when investors sell treasury bills.

When bond prices fall, yields rise because investors demand more in return for their holding.

“Investors have responded with growing optimism following the initial cautiousness in response to the emergence of the omicron variant, even as the number of cases increases,” said Danielle Hale, chief economist at Realtor.com. “This is reflected not only in stocks hitting record highs, but also in 10-year Treasury bill rates, which exceeded a 1.5% yield on Wednesday for just the second time in December.”

As yields rise, Hale expects mortgage rates to rise as well.

“If higher rates on longer-term Treasuries can be sustained, which will likely require stable or improving news around omicron and covid, it will mean higher mortgage rates for homebuyers.” , she said. “However, it will also likely mean a strong economic environment in the form of a strong labor market, which will help homebuyers better cope with the hurdle of rising housing costs.”

The Mortgage Bankers Association did not release data on mortgage applications this week due to the holidays.

Results for the weeks ending December 24 and 31 will be released on January 5.


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