Housing markets show continued signs of strengthening according to reports released on Wednesday. The National Association of RealtorsÂ® reported that sales of pre-owned homes rose to 5.49 million in June as compared to Mayâs revised reading of 5.32 million pre-owned homes sold and expected sales estimated at 5.42 million sales. Expectations were based on Mayâs original reading of 5.35 million sales. Juneâs reading was the highest since February of 2007. Readings for existing home sales are calculated on a seasonally adjusted annual basis.
Summary: Mortgage rates in Washington State and across the country rose a bit this week. The economists at Freddie Mac expect additional rate increases throughout 2017, as a result of inflation, labor market gains, and actions taken by the Federal Reserve.
Earlier today, Freddie Mac released the latest results of its weekly mortgage market survey. It showed a slight rise in mortgage rates compared to last week, for all three loan products tracked.
But more important was their chief economist’s statements regarding the possibility of additional rate hikes throughout the year. Here’s what Washington State borrowers should know about it.
Latest Survey: Rates Rose in All Categories
On March 16, 2017, Freddie Mac published an update to its long-running weekly survey of the primary mortgage market (PMMS). According to the survey, mortgage rates rose slightly from last week, in all three of the home loan categories they monitor.
Here are the latest rate averages for the week of March 16:
- The average rate for a 30-year fixed mortgage rose nine basis points (0.09%) this week to land at 4.30%, with an average 0.5 points paid at closing. That’s the highest it has been in 2017, to date. A year ago at this time, the average 30-year mortgage rate was 3.73%.
- The average interest rate for a 15-year fixed mortgage also rose this week, settling in at 3.50% with a half point paid at closing. A year ago it averaged 2.99%.
- The average for a 5-year hybrid adjustable-rate mortgage (ARM) rose to 3.28% this week, an increase of five basis points over last week. A year ago it was at 2.93%.
These numbers are based on a survey of about 125 lenders across the country.
Forecast: Washington Mortgage Rates Could Rise Further in 2017
Earlier this month, the Federal Reserve’s Open Market Committee (FOMC) announced it would raise short-term interest rates. That marked the first rate hike of 2017, but probably not the last.
The FOMC’s decision came as a result of continued confidence in the economy’s trajectory. In a press conference following the FOMC policy meeting, Fed Chair Janet Yellen stated:
“We have seen the economy progress over the last several months in exactly the way we anticipated. We have some confidence in the path the economy is on.”
Housing analysts believe that this, along with other changes in the economy, could push mortgage rates higher during 2017. The Federal Reserve controls the short-term funds rate that is used for overnight transfers among banks. They do not control mortgage rates directly. But the Fed’s policies do affect market activity for mortgage-backed securities, which in turn can affect pricing for loans offered to consumers.
In short, when the Fed raises the federal funds rate, we often see a resulting rise of mortgage rates in Washington State (and elsewhere across the U.S.).
This, and other factors, could cause home loan rates in Washington to rise even further, as we move through 2017. In a recent statement, Freddie Mac’s economists said: “Increasing inflation, continued gains in the labor market and the Fed’s intentions for further rate increases — all three will keep pushing mortgage rates up this year.”