Milestone: Today’s 30-Year Mortgage Rates Highest Since July

Two weeks ago, we reported that financial analysts were predicting a gradual rise in mortgage rates during 2016. Could this be the start of it?

Thirty-year mortgage rates have been hovering below the 4% mark since mid-summer of this year. But not anymore. Earlier today, Freddie Mac reported that the average rate for a 30-year fixed home loan rose five basis points (0.05%) to land at 4.01%. That means today’s mortgage rates are the highest they’ve been since the week of July 23.

Granted, a five-basis-point jump is more of a small hop. So it’s no cause for alarm. What’s more important here, especially for 2016 home buyers and mortgage shoppers, is the possibility that we are witnessing the start of an upward trend. The Home Buying Institute encourages those in the market for a home loan to monitor such trends.

Today’s Mortgage Rates Rise to a 5-Month High

The average rate for a 30-year fixed mortgage is currently 4.01%, according to the weekly survey published by Freddie Mac earlier today. That brings today’s mortgage rates to a five-month high. The 30-year average hasn’t been above 4% since the week of July 23, when it hit 4.04% (shown in the middle of the chart below).

Mortgage rate chart, Freddie Mac
Freddie Mac’s mortgage rate chart for 2015

Today’s 15-year fixed mortgage rates are also slightly higher than last week, according to Freddie Mac’s weekly market survey. The 15-year average rose to 3.24% this week, a jump of two basis points over last week. The average rate for a 5-year ARM loan climbed to 3.08%, while the 1-year ARM held steady at 2.68%.

According to Sean Becketti, chief economist at Freddie Mac, consumer confidence played a role in today’s mortgage rate increase:

“In the final week of 2015, Treasury yields jumped reacting in part to strong consumer confidence in December. In response, the 30-year mortgage rate rose 5 basis points to 4.01 percent, ending a 5-month span below 4 percent.”

This is certainly a trend worth watching, especially if you’re in the market for a home loan. Home buyers, in particular, should monitor these development in light of rising house values. Buyers who purchase a home later in 2016 could end up paying more for a house and a mortgage loan.

Read our top tips for home buyers in 2016

A Widely Anticipated Increase?

It’s not surprising that today’s mortgage rates are higher than last week’s averages. In fact, many analysts were expecting this to happen. There are several factors driving this trend.

Earlier this month, the Federal Reserve announced it would raise the short-term federal funds rate for the first time in seven years. And this tends to have an indirect influence on mortgage borrowing costs. This is partly why so many analysts and economists have predicted a gradual rise in rates during 2016.

Freddie Mac’s economic team made just such a prediction earlier this month, forecasting that 30-year mortgage rates would climb to 4.7% by the end of 2016. Similarly, the Mortgage Bankers Association (MBA) predicted that the 30-year average would climb to around 4.8% by the fourth quarter of 2016.

In a survey conducted by Bloomberg earlier this month, 38 of 47 economists said that the Federal Reserve’s recent policy shift would cause 30-year mortgage rates to rise next year. This appears to be the general consensus across the board.

We’re not saying you should “bank” on these predictions. After all, they’re merely an educated guess. But when most everyone seems to be saying the same thing, perhaps it’s worth listening to.

Disclaimer: This story contains data shared by third parties not associated with the Home Buying Institute. Today’s mortgage rate averages were provided by Freddie Mac. Such information is deemed reliable but not guaranteed. Additionally, this article contains forward-looking statements (forecasts) that should be viewed as opinions, not facts. HBI makes no claims or assertions about future mortgage trends.