Mortgage Daily Logo

Mortgage Rates Up, Further Deterioration Ahead


After ascending to the highest level in more than two years, mortgage rates moved even higher and are likely to be much worse in next week’s report.

Thirty-year fixed rates on residential loans averaged 4.16 percent in the Freddie Mac Primary Mortgage Market Survey for the week ended Dec. 15.

Long-term mortgage rates have not been this high
since the week that ended on  Oct. 2, 2014, when Freddie reported the average at 4.19 percent.

Rates rose from
4.13 percent the prior week, marking the seventh straight week-over-week increase. In the same week last year, 30-year fixed rates averaged 3.97 percent.

Freddie Mac Chief Economist Sean Becketti explained that the survey was completed prior the Federal Open Market Committee’s announcement of rate increases.

“As was almost-universally expected, the FOMC closed the year with its one-and-only rate hike of 2016,” Becketti stated. “The consensus of the committee points to more rate hikes in 2017. However, the experience of this year combined with the policy uncertainty that accompanies a new administration suggests a wait-and-see outlook.”

Joe Farr, director at MBSQuoteline, told Mortgage Daily in a written statement that because Freddie’s survey doesn’t reflect the impact of Wednesday’s FOMC statement, rates as of today are actually much higher than in the survey.

An analysis of Treasury market activity by Mortgage Daily indicates that fixed rates are likely to be around 10 basis points worse in Freddie’s next survey.

Sixty-three percent of panelists surveyed by for the week Dec. 15 to Dec. 21 agreed with Mortgage Daily’s forecast. A quarter expected rates to move no more than 2 BPS, and just 13 percent projected a decline.

The Mortgage Bankers Association predicted in its MBA Mortgage Finance Forecast that 30-year fixed rates will average 3.8 percent in the fourth quarter then rise to 4.3 percent three months later and 4.4 percent in the second-quarter 2017.

A report from Moody’s Investors Service said that the 25-basis-point increase in the Fed’s benchmark rate
— along with additional rate increases next year — will leave the rate at 1.5 percent by the end of next year.

Moody’s added that it “anticipates the equilibrium federal funds rate to converge around 3.0 percent and the 10-year yield to settle at around 4.0 percent within the next five years.” The 10-year yield closed at 2.60 percent Thursday.

Moody’s expects higher rates to impact credit standards.

“As long-term interest rates rise and mortgage loans become less affordable, originators will come under pressure to lower their credit standards in order to maintain volume,” Moody’s Vice President Sonny Weng said in a statement.

This means that loan-to-value ratios on securitized loans will be higher, debt-to-income ratios will increase and FICO scores will fall.

Jumbo rates were
7 BPS less than conforming rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Dec. 9.

At 3.37 percent, average 15-year fixed rates were a basis point more than in Freddie’s survey for the week ended Dec. 8, 2016.
The spread between 15- and 30-year rates widened to 79 BPS from the previous week’s 77 BPS.

A 2-basis-point increase from the previous report left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 3.19 percent in Freddie’s survey.

Data from the Department of the Treasury indicate that the yield on the one-year Treasury note closed Thursday at 0.91 percent, rising from 0.84 percent seven days earlier.

At 1.30 percent as of Wednesday, the six-month London Interbank Offered Rate
slightly higher than 1.29 percent a week prior, according to

ARM share was 8.1 percent in the most-recent Mortgage Market Index report.

Related Posts

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last week, and more of the same is expected. On conventional loans utilized to finance a home purchase with amounts up to the...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rate Forecasts Have Little Change Ahead

Thirty-year mortgage rates moved lower this past week and this past month. Short- and long-term forecasts have little movement ahead for mortgage rates. Ellie Mae Inc.'s Origination Insight Report | September 2018 indicated that average 30-year note rates on...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Soar, Could Sink in Next Report

An expected surge in mortgage rates came to fruition this week. The latest forecast has fixed rates tumbling in next week's report. A new index for adjustable-rate mortgages moved lower. A stunning 19-basis-point surge from the preceding week left average 30-year...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Dip, But Likely to Skyrocket

Mortgage rates retreated a modest amount just one week after climbing to a seven-year high. The next rate report, however, is likely to reflect significant escalation. Prospective 30-year borrowers using the LendingTree network during September were offered an average...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Little Changed, More of Same Ahead

Over the past week, there was little change in interest rates on home loans. During the next week, more of the same is likely. Recently rising rates have helped the Federal Home Loan Banks' earnings. Conventional mortgages with conforming loan amounts used to finance...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam