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Mortgage Rates Increased Slightly, Remains Below 4% for 12th Straight Week

Oct 16, 2015 05:43 AM EDT | By Jean-Claude Arnobit
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Freddie Mac, mortgage rates
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Mortgage Rates Increased Slightly, Remains Below 4% for 12th Straight Week
(Photo : Tim Boyle | Getty Images News)

Freddie Mac said in a press release that their Primary Mortgage Market Survey show mortgage rates have nudged slightly higher.

The rates, however, have remained below four percent and will probably remain lower longer than previously reported.

Freddie Mac adds in the press release that the longer forecast for low mortgage rates is due to the statement of the U.S. Federal Reserve Bank that they may not raise short-term interest rates.

The low Treasury yields, which was pushed down by the weaker than expected consumer demand, also contributes to the prolonged low mortgage rates.

The 30-year fixed-rate mortgage (FRM) averaged 3.82 percent on the week that ended on Oct. 15, 2015, up from the previous week's 3.76 percent average, according to the press release.

The 15-year FRM averaged 3.03 percent, down from the 2.9 percent average of the previous week.

The Orange County Register provides an example of how the low mortgage rates this year compares to the mortgage rates last year.

Suppose a borrower gets the 30-year FRM on a $417,000 loan, last year's rates of 3.97 percent would require the borrower to pay $1,984, $36 less than the $1,948 payment for this week's mortgage rates.

The Orange County Register also adds that the Mortgage Bankers Association has reported that the loan application volume has declined by almost 28 percent.

This offset last week's 25 percent gain.

Freddie Mac adds in the press release that the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) is unchanged from the previous week, averaging 2.88 percent this week.

The 1-year Treasury-indexed ARM is down to 2.54 percent this week compared to 2.55 percent last week.

Sean Becketti, chief economist, Freddie Mac, said in the press release that this week's survey results mark the 12th straight week mortgage rates remained below four percent.

"As the shock of the weak September employment report wore off, Treasury rates drifted higher. In response, the 30-year mortgage rate climbed 6 basis points to 3.82 percent, marking 12 consecutive weeks below 4 percent," he said.

He adds in the press release that mortgage rates may remain lower longer than previously expected.

"After this week's survey closed, Federal Reserve Governor Daniel Tarullo was quoted suggesting the Fed may not act this year, and Wednesday the 10-year Treasury closed under 2 percent in reaction to economic releases indicating weak consumer demand," he said.

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