It’s zero-hour for the Fed
Foster City, Calif. (GlobeNewswire) December 16, 2015 – Rates on the most popular types of mortgages are mostly steady on the cusp of the most important Federal Reserve meeting in years, according to HSH.com’s Weekly Mortgage Rates Radar.
The average rate for conforming 30-year fixed-rate mortgages rose by three basis points (0.03 percent) to 4.04 percent. Conforming 5/1 Hybrid ARM rates remained unchanged, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.19 percent.
“It’s zero hour for the Fed,” said Keith Gumbinger, vice president of HSH.com. “If things had worked out as expected at the beginning of the year, we might be talking about a second or third increase in short-term interest rates by this point, but instead we’re at ‘liftoff’ as we close 2015. Markets are ready, and interest rates have risen over the last few weeks in anticipation of the change, so at least the initial effect on mortgage rates should be muted.”
Future Intentions
What happens to interest rates as we move forward largely depends upon what the Fed has to say about its future intentions for monetary policy — how frequently and how much it expects to rates in the future. The Fed of course won’t provide specific policy direction or the timing for future changes, but updates to economic projections and Fed members’ forecasts for interest rates in 2016 and beyond will provide context for the financial markets to consider and digest.
“Unless the Fed somehow surprises the markets with a more aggressive forecast for policy than is currently expected, we don’t expect to see any huge change in mortgage rates after the close of the meeting,” added Gumbinger. “The Fed has provided fairly clear guidance that it thinks it will be a long, slow process of raising interest rates over the course of several years, and that interest rates might not even approach historical norms during this upcycle. For now, mortgage rates may have a little space to rise, but probably not much.”
Average mortgage rates and points for conforming residential mortgages for the week ending December 15, according to HSH.com:
Conforming 30-year fixed-rate mortgage
- Average Rate: 4.04 percent
- Average Points: 0.17
Conforming 5/1-year adjustable-rate mortgage
- Average Rate: 3.19 percent
- Average Points: 0.10
Average mortgage rates and points for conforming residential mortgages for the previous week ending December 08 were, according to HSH.com:
Conforming 30-year fixed-rate mortgage
- Average Rate: 4.01 percent
- Average Points: 0.18
Conforming 5/1-year adjustable-rate mortgage
- Average Rate: 3.19 percent
- Average Points: 0.11
