Mortgage rates rise to highest level since Brexit vote

Observers expecting a ‘creep up’

Ever so gradually, mortgage rates are rising, back to where they were in the spring.

Or, to be more precise, mortgage rates are returning to their levels before the Brexit vote on June 23.

The United Kingdom’s surprising decision to exit the European Union led U.S. mortgage rates to tumble about one-eighth of a percentage point initially.

Mortgage rates trickled even further down after that. The day before the Brexit vote, the average rate on a 30-year fixed mortgage was 3.73 percent in Bankrate’s weekly survey. Two weeks later, it had fallen to 3.52 percent, just above the modern-day low of 3.5 percent.

Now the 30-year fixed has risen above 3.64 percent for the first time since June 29.

RATES THIS WEEK

The benchmark 30-year, fixed-rate mortgage rose this week to 3.69 percent from 3.64 percent, according to Bankrate’s weekly survey of large lenders.

A year ago, it was 3.98 percent. Four weeks ago, the rate was 3.56 percent. The 30-year fixed 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 3.79 percent. This week’s rate is 0.10 percentage points lower than the 52-week average.

■ The benchmark 15-year, fixedrate mortgage rose to 2.96 percent from 2.93 percent.

■ The benchmark 5/1 adjustable-rate mortgage rose to 3.14 percent from 3.11 percent.

■ The benchmark 30-year, fixedrate jumbo mortgage rose to 3.74 percent from 3.67 percent.

FED’S INFLUENCE

Bankrate’s mortgage rate survey was conducted before the announcement of the Federal Reserve’s monetary policy on Wednesday afternoon. The central bank’s rate-setting committee kept the federal funds rate unchanged and implied that an increase could come as early as the next meeting in mid-December.

There is almost no connection between the federal funds rate, which is for overnight loans, and the 30year mortgage, which is a loan for almost 11,000 days.

Sometimes the two interest rates move in the same direction, and sometimes they move in opposite directions. But the consensus among mortgage executives is that a Fed rate hike in December would be accompanied by a rise in mortgage rates.

“It is likely that rates will start to creep up at the end of this year,” says Kevin Parker, a mortgage executive for Navy Federal Credit Union.

Note that he expects rates to “creep up,” not to rise dramatically.

No one expects mortgages to skyrocket. “I don’t think over the course of the next six to 12 months consumers have to worry about interest rates spiking,” says Steve Udelson, president of real estate brokerage Owners.com. “The impact is not going to be all that material in the cost of borrowing.”

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