Mortgage rates jump again for 2nd week and hit 2017 highs
Updated 6:27 p.m. UTC March 16, 2017
Mortgage rates jumped for a second straight week and hit new highs for the year as borrowing costs for homebuyers rise.
The average 30-year mortgage rate climbed to 4.30% from 4.21% last week, mortgage buyer Freddie Mac said Thursday. That is up from 3.73% a year ago.
Rates rose in anticipation of a widely expected hike in the Federal Reserve’s key interest rate, which the central bank announced Wednesday. The Fed raised its benchmark short-term rate to a range of 0.75% to 1% and left intact its forecast for two more rate hikes in 2017 and three in 2018.
Federal Reserve Chair Janet Yellen said at a news conference Wednesday after the decision that “the economy is doing well.” The Fed statement said that “inflation has increased in recent quarters, moving close to (the Fed’s) 2% longer run objective.”
More on the Fed rate hike:
What a Fed rate hike means for you (get ready to pay more)
Fed rate hike: What it means for mortgage rates
Mortgage rates are expected to continue to rise gradually.
“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,” Freddie Mac said in its weekly mortgage rates survey.
The average rate on a 15-year mortgage rose to 3.50% from 3.42% last week. The 15-year rate stood at 2.99% a year ago.
The 5-year adjustable rate mortgage (ARM) averaged 3.28%, up from 3.23% last week and 2.93% from a year ago.
The average fee for a 30-year mortgage remained at 0.5 point this week, according to Freddie Mac. The fee on a 15-year mortgage was 0.5 point and the 5-year ARM was 0.4 point.
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Mortgage rates still remain historically low and “rising rates are not expected to slow down demand this spring homebuying season,” said First American chief economist Mark Fleming.
“Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong.”