Mortgage rates rise for a second week in a row

Mortgage rates increased this week, along with bond yields around the world.

“Global yields all over are moving higher,” says Elizabeth Rose, sales manager for Movement Mortgage in Dallas. “We live in a global economy now, and they were kept low for a period of time because there were expectations of maybe continued quantitative easing. That hasn’t materialized, and those bond yields have gone up and ours have, as well.”

Closest to home, the yield on the 10-year Treasury bond rose to a four-month high, briefly reaching 1.8 percent Wednesday before dropping to 1.77 percent at mid-afternoon. The increase might be partly due to investors’ belief that the Federal Reserve will raise short-term interest rates late this year.

Overseas, government bond yields in Europe and Japan have been rising because investors worry that foreign central banks might begin to slow their bond purchases in efforts to goose their economies through quantitative easing.

“I think we are going to see continued upward pressure in rates,” Rose says. But she doesn’t see a big jump in rates anytime soon: “Until we see inflation spike, we’re not going to see mortgage rates spike.”

Mortgages this week

The benchmark 30-year fixed-rate mortgage rose this week to 3.62 percent from 3.56 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 3.93 percent. Four weeks ago, the rate was 3.64 percent.

The mortgages in this week’s survey had an average total of 0.22 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.8 percent. This week’s rate is 0.18 percentage points lower than the 52-week average.

• The benchmark 15-year fixed-rate mortgage rose to 2.91 percent from 2.85 percent.

• The benchmark 5/1 adjustable-rate mortgage rose to 3.12 percent from 3.07 percent.

• The benchmark 30-year fixed-rate jumbo mortgage rose to 3.64 percent from 3.58 percent.

Although the Federal Reserve does not directly influence mortgage rates, its decisions and deliberations have an indirect effect. Wednesday afternoon — after Bankrate had finished its weekly rate survey — the Fed released the minutes for its most recent policy meeting last month. The minutes said that the decision to hold short-term interest rates steady was a close call.

“Some participants believed that it would be appropriate to raise the target range for the federal funds rate relatively soon if the labor market continued to improve and economic activity strengthened, while some others preferred to wait for more convincing evidence that inflation was moving toward the committee’s 2 percent objective,” according to the minutes.

The Fed’s minutes imply that the central bank is more likely than not to raise the federal funds rate at its December meeting. Today’s mortgage rates already take that possibility into account, so they aren’t likely to rise sharply in coming days. But the Fed’s minutes don’t give mortgage rates much room to fall, either.