Mortgage Rates Hit Multi-Year Highs Ahead of Fed Meeting

Mortgage Rates Hit Multi-Year Highs Ahead of Fed Meeting

But with a Fed rate hike now in the books and a recent decline in oil prices below the $50 per barrel threshold, this marks two factors that can take edge off inflation increases.

The larger jumbo 30-year fixed climbed to 4.43 percent and the average 15-year fixed mortgage rate stepped up to 3.64 percent.

"Increasing inflation, continued gains in the labor market and the Fed's intentions for further rate increases - all three will keep pushing mortgage rates up this year".

Federal Reserve Board Chair Janet Yellen announced Wednesday that the central bank would be adjusting the target range for the federal funds rate-a short-term interest rate at which banks lend money to one another when their reserves fall short-for the third time since the Great Recession, to a range of between 0.75 and 1 percent.

This is the highest rate for the 30-year fixed since April 23, 2014, when it was 4.48 percent. That is up from 3.73% a year ago. The average rate now is a little over 16 percent. And higher rates will also drastically reduce the number of refinance loans being issued, which lenders will try to offset by doing more purchase loans. The market composite index - a measure of total loan application volume - rose 3.1 percent.

The 5-year adjustable rate mortgage (ARM) averaged 3.28%, up from 3.23% last week and 2.93% from a year ago. The five-year adjustable rate average rose to 3.28 percent with an average 0.4 point.

"Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact".

If the Fed accelerates less than expected, there is still a chance for mortgage rates to hold the line at the current ceiling (4.375% for top tier 30yr fixed scenarios for the average lender). Mortgage rates were lower last year, but consumers are feeling slightly better about the economy today than a year ago and more millennials are aging into their homebuying years.

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