Mortgage rates pause ahead of Federal Reserve meeting
Washington Post
After several weeks of volatility, mortgage rates last week settled in ahead of this week’s Federal Reserve meeting.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average ticked up to 5.54% with an average 0.8 point. (A point is a fee paid to a lender equal to 1% of the loan amount. It is in addition to the interest rate.) It was 5.51% the previous week and 2.78% a year ago.
Freddie Mac, the federally chartered mortgage investor, aggregates rates from about 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The 15-year fixed-rate average grew to 4.75% with an average 0.8 point. It was 4.67% the previous week and 2.12% a year ago. The five-year adjustable-rate average fell to 4.31% with an average 0.3 point. It was 4.35% a week ago and 2.49% a year ago.
“The Freddie Mac fixed rate for a 30-year loan rose again this week, as capital markets flashed brighter signs of an impending recession,” George Ratiu, manager of economic research at Realtor.com, said Thursday. “The spread between the 2-year and 10-year Treasuries moved even deeper into negative territory this week. This yield-curve inversion points toward growing investor concern that the Federal Reserve’s rate setting is not likely to tamp down fast-running inflation.”
Mortgage rates are caught in a tug of war – pulled one way by inflation fears, yanked the other by recession concerns. The reason rates have been seesawing is because investors can’t figure out which one worries them the most.The Federal Reserve is trying to tame inflation while not setting off a recession. The Fed is expected to raise its benchmark rate again when it meets this week. At its last meeting, the central bank raised the federal funds rate by 75 basis points, its third rate hike this year. (A basis point is 0.01 percentage point.) Other central banks are taking similar action. The European Central Bank raised interest rates by 50 basis points on Thursday, its first rate hike in 11 years.