Mortgage rates rise with Fed-spectations

Interest rates on mortgages rose this week as the market began preparing for a potential federal funds rate hike at the Federal Reserve's next policy-setting meeting.

Treasury yields jump

Yields on Treasury notes have been higher this week compared with last week. They started increasing after the Federal Open Market Committee meeting concluded last week when the central bank hinted at a possible December rate hike.

While speaking to the House Financial Services Committee, Federal Reserve Board Chair Janet Yellen said Wednesday that a rate hike next month is a "live possibility."

The 10-year Treasury yield is up about 20 basis points, going from around 2.03 percent Oct. 28 to about 2.23 percent Wednesday afternoon, according to CNBC.

Mortgage rates have somewhat followed suit, says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Ma.

"It's not awful, but they were trending downward (before the meeting) because people thought the Fed was on hold until probably 2016," he says.

This week's rates

• The benchmark 30-year fixed-rate mortgage rose to 3.98 percent from 3.88 percent, according to Bankrate's national survey of large lenders. A year ago, the rate was 4.14 percent. Four weeks ago, it was 3.95 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 has averaged 3.98 percent. This week's rate is equal to the 52-week average.

• The benchmark 15-year fixed-rate mortgage rose to 3.23 percent from 3.13 percent.

• The benchmark 30-year fixed-rate jumbo mortgage rose to 3.87 percent from 3.84 percent.

• The benchmark 5/1 adjustable-rate mortgage rose to 3.28 percent from 3.17 percent.

Apps down, prices up

Applications for home loans inched down 0.8 percent last week from the week prior, according to the Mortgage Bankers Association's weekly survey. Purchases and refinances both fell 1 percent.

Separate data from CoreLogic show that national home prices increased 0.6 percent from August to September and were up 6.4 percent year over year from September 2014.

As the mortgage industry continues to deal with regulatory changes, it's important for borrowers to stay focused throughout the lending process, says Pava Leyrer, chief operating officer for Northern Mortgage Services in Grandville, Mich.

"Get in as early as possible," she says. "Get with a professional that knows what they're doing, pay attention to your documents and to your timing and, for heaven's sake, if we ask you for something, get it back to us right away."

Jobs data

Eyes are on the October employment report from the Bureau of Labor Statistics.

"In previous months, it seems like (the jobs report) lost importance and it was more about what the Fed said and did," but not this time around, Becker says.

The ADP national employment report, which is used every month to gauge the BLS jobs numbers, found that the private sector added 182,000 jobs in October.

"Keep in mind, anything over 150,000 new jobs should be enough to cause the unemployment rate to fall, and that looks likely," says Joel Naroff, president and chief economist for Naroff Economic Advisors. "If we get a number close to or above 200,000, investors better start taking Chair Yellen's warning very seriously."