Housing Market

Mortgage rates increase in anticipation of Fed comments on bond-buying

mortgage rateRecent data released by Freddie Mac showed average fixed mortgage rates edged up last week amid anticipation of comments from the Federal Reserve on its bond-buying program.

“Fixed mortgage rates continued to follow bond yields higher leading up to the Aug. 21 release of the Federal Reserve monetary policy committee’s minutes for July,” Freddie Mac Chief Economist Frank Nothaft said. “In its July 30 and [July] 31 meetings, the committee members were broadly comfortable with a plan to start reducing its bond purchases later this year, although a few emphasized the importance of being patient.”

The 30-year FRM averaged 4.58 percent, up from 4.4 percent the previous week. The 15-year FRM posted similar results, rising from 3.44 percent to 3.6 percent last week.

The five-year adjustable-rate mortgage averaged 3.21 percent, down from 3.23 percent the week prior, while the one-year ARM remained unchanged at 2.67 percent.

Nothaft said that while some participants at the Fed’s meetings expressed concern that mortgage rate increases could hinder the housing market, others expressed confidence that the housing recovery would prevail in spite of the rate increases.

“In fact, existing home sales increased in July to the strongest pace since November 2009 and homebuilder confidence in August rose to its highest reading since November 2005,” Nothaft said. “Both increases occurred after mortgage rates had risen from their spring-time lows.”

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