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After falling for two consecutive weeks, mortgage rates rose to their second highest level this year, according to Freddie Mac’s latest Primary Mortgage Market survey.
“The 30-year fixed-rate mortgage climbed eight basis points to 4.62%, and the Federal Reserve Board on Wednesday raised the federal funds rate by 25 basis points,” Freddie Mac Chief Economist Sam Khater noted in the report.
“The good news is that the impact on consumer budgets will be smaller than past rate hike cycles. That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements," Khater said .“The adjustable rate mortgage share of outstanding loans is a lot smaller now – 8 % versus 31%– than during the Fed’s last round of tightening between 2004 and 2006.”
(Source: Freddie Mac)
According to the report, the 30-year fixed-rate mortgage averaged 4.62% for the week ending June 14, 2018, up from 4.54% last week, and up from 3.91% last year.
The 15-year FRM rose to an average 4.07% this week, up from 4.01 % last week and up from 3.18% in 2017.
The five-year Treasury-indexed hybrid adjustable-rate mortgage increased to an average 3.83% this week, up from 3.74% last week. This time last year it was 3.15%.
“Still, inflation continues to firm and borrowing costs are inching higher. Although wages are slowly growing, stronger gains would certainly go a long way in helping consumers offset these increases in prices and rates,” Khater said.
The Federal Reserve’s outlook for gradual interest-rate hikes, reported that despite moderate wage gains, U.S. inflation accelerated to the fastest pace in more than six years. Consumers will need to take inflation into account when home shopping.
