September 18, 2015 - 4:26 pm
Interest rates on mortgages inched higher this week, just a day before the Federal Reserve’s policy-setting committee decided against increasing rates in its September meeting held Thursday.
Media outlets reported that the committee cited a weak global economy, low inflation and instability in financial markets as to why it passed on an increase.
For the most part, U.S. Treasury bonds rallied after the announcement. But the 2-year yield plunged 11 percent, or 0.089 percentage point, to 0.722 percent, according to an Associated Press report.
Retail and food services sales in August rose at a seasonally adjusted pace of 0.2 percent from July and 2.2 percent from the same time last year, according to data released this week from the U.S. Census Bureau. Also, July 2015 sales were revised upward.
“People ate at home and in restaurants, bought clothes and electronics, but stayed away from furniture and homebuilding stores,” says Joel Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pa. “Essentially, after a very strong July, people continued to spend in August.”
Positive data has led to lower demand for government bonds, which pushed yields higher. The 10-year Treasury note yield rose from around 2.17 percent Monday morning to 2.3 percent Wednesday afternoon, according to CNBC. Mortgage rates are closely tied to long-term Treasury yields.
A look at rates this week
* The benchmark 30-year fixed-rate mortgage rose to 4.06 percent from 4.05 percent, according to Bankrate’s Wednesday survey of large lenders. A year ago, it was 4.33 percent. Four weeks ago, the rate was 4.06 percent.
The mortgages in this week’s survey had an average total of 0.23 discount and origination points. Over the past 52 weeks, the 30-year fixed rate has averaged 4.01 percent. This week’s rate is 0.05 percentage points higher than the 52-week average.
* The benchmark 15-year fixed-rate mortgage rose to 3.25 percent from 3.23 percent.
* The benchmark 30-year fixed-rate jumbo mortgage rose to 3.97 percent from 3.92 percent.
* The benchmark 5/1 adjustable-rate mortgage rose to 3.28 percent from 3.24 percent.
More housing market progress
Things continue to look upbeat on the homebuilder front. Confidence in the new, single-family home construction market increased this month to its highest level since October 2005, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
Nearly 760,000 properties recovered equity in the second quarter of 2015, according to a new CoreLogic report. With this addition, 91 percent of all mortgaged properties had equity at the end of the second quarter.
Mortgage applications dropped 7 percent last week from a week prior, according to the Mortgage Bankers Association’s weekly survey. Refinances fell 9 percent and purchases decreased 4 percent.
For potential homebuyers, the advice from Lee is threefold: “Make sure you get preapproved by a licensed professional, understand that the market is volatile and be ready to act quickly.”
— RJ RealEstate.Vegas Editor Lyn Collier contributed to this article.