Mortgage rates rise after six weeks of quiet

Interest rates are still below the 52-week average

The most popular mortgage rose to its highest level since late June, after stalling for a month and a half near a record low.

Michael Moskowitz, president of Equity Now, a mortgage lender based in New York City, says the increase in rate has been relatively modest, at least for some borrowers. He says that late last week, he quoted a customer a rate of 2.875 percent for a $540,000, 15-year loan, paying 0.4 discount point.

On Tuesday, the customer could get the same rate, but paying 0.8 discount point. That’s an extra $2,160 upfront to get the same rate the customer was offered five days earlier.

Borrowers are asking the same questions they always ask, Moskowitz says: “Should we lock now? Should we lock later? Where are the rates going?”

The standard advice nowadays is that if you’re comfortable with the interest rate on the mortgage, go ahead and lock.

“If you can lock in a rate now, don’t be a pig; this is about as good as I expect it to be moving forward,” says Matthew Carbray, a certified financial planner for Ridgeline Financial Partners, in Avon, Connecticut.

Even with this week’s modest increase, Carbray says mortgage rates have “remained very favorable for quite some time in light of the Fed’s unwillingness to raise the target Fed funds rate.”

MORTGAGE RATES THIS WEEK

The benchmark 30-year fixedrate mortgage rose this week to 3.64 percent from 3.56 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.06 percent. Four weeks ago, the rate was 3.56 percent.

This is the highest level for the 30-year fixed mortgage since Bankrate’s June 22 survey, when it was 3.73 percent. It was the biggest one-week jump in the 30-year fixed since April. For six straight weeks, the 30-year fixed had remained at 3.56 percent or 3.57 percent in Bankrate’s weekly survey, an unusually long standstill.

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 3.83 percent. This week’s rate is 0.19 percentage points lower than the 52-week average.

The benchmark 15-year fixedrate mortgage rose to 2.91 percent from 2.87 percent.

The benchmark 5/1 adjustablerate mortgage rose to 3.13 percent from 3.07 percent.

The benchmark 30-year fixedrate jumbo mortgage rose to 3.62 percent from 3.54 percent.

GLOBAL BEFUDDLEMENT

Rates went up as global investors sold bonds in befuddlement over the policies of the central banks of Europe and the United States.

Bond yields began to edge upward Sept. 8, shortly after the European Central Bank met and declined to add stimulus.

Instead, the head of Europe’s central bank scolded Germany’s government for not spending more to stimulate the continent’s economy.

Here in the States, the Federal Reserve’s monetary policy committee is scheduled to meet next week, and there’s more uncertainty than usual about what the central bank is going to do.

In late August, Janet Yellen, chair of the Fed, said in a speech: “Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the Federal funds rate has strengthened in recent months.”

That seemed to boost the likelihood that the Fed would raise the overnight Federal funds rate next week.

Then on Monday, a Fed governor gave a speech saying, in effect: Not so fast with the interest rate increases.

Lael Brainard, a Fed governor who is a member of the central bank’s rate-setting committee, said, “the case to tighten policy preemptively is less compelling” because inflation has barely risen, even as the unemployment rate has fallen. She added that the United States should avoid “the risk of becoming trapped in a lowgrowth, low-inflation, low-inflation-expectations environment” as seen in Europe and Japan.

The conflicting messages, and the uncertainty, have led investors to sell bonds.

During a bond sell-off, bond prices go down and yields go up. Mortgage rates tend to rise, too.

Mortgage rates have been steady lately “as general consensus about rate hikes has been overwhelmingly discouraging up to this point,” says Carbray, the financial planner in Connecticut. “September’s meeting has had the most divided investor sentiment about what will happen with rates, but mortgage rates have not moved much — so it could be another period of kicking the can down the road.”

THINKSTOCK The benchmark 30-year fixed-rate mortgage rose this week to 3.64 percent from 3.56 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.06 percent. Four weeks ago, the rate was 3.56 percent.

THINKSTOCK Borrowers are asking the same questions they always ask, says, Michale Moskowitz, president of Equity Now: “Should we lock now? Should we lock later? Where are the rates going?”