Fixed mortgage rates rose early this week, with Freddie Mac’s survey showing lenders offering 30-year loans to solid borrowers at an average of 4.4%, up from 4.32% in the previous week.
The average rate for a 15-year fixed loan rose from 3.32% to 3.42%, and the average start rate rose from 3.02% to 3.1% on hybrid loans that become adjustable after five years at a fixed rate.
The increase reflected concerns that the Federal Reserve might begin raising interest rates in early 2015, as the Fed’s new head, Janet Yellen, suggested late last week, Freddie Mac chief economist Frank Nothaft said. The comment caused a sharp spike in rates, including the yield on Treasury securities.
As this week wore on, the yield fell on 10-year Treasury notes, a barometer for fixed-rate mortgages, suggesting that the upward tick in home-loan rates would be short-lived.
Freddie Mac asks lenders each Monday through midday Wednesday about the rates they are offering to low-risk borrowers who pay less than 1% of the loan amount in upfront lender fees and discount points. It then averages the responses.
Actual rates fluctuate daily and are calculated in increments of an eighth of a percentage point. The Freddie Mac survey shows the typical rate was 4½% for a 30-year fixed mortgage at the start of this year but has since fallen a bit, zigzagging in the 4¼% to 4 3/8% range since mid-January.
Payments to third parties such as appraisers and title insurers, which generally come out of consumers’ pockets, are not included in the survey. Borrowers can obtain lower rates by making additional upfront payments or get zero-cost loans by accepting higher rates.
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