Mortgage rates rise modestly ahead of Fed meeting

Mortgage rates increased this week in preparation for an increasingly likely rate hike next week by the Federal Reserve’s policy-setting committee, and in response to a favorable employment report.

Praise-worthy jobs numbers

The U.S. economy added 211,000 jobs in November, after gaining an upwardly revised 298,000 jobs in October, according to the Bureau of Labor Statistics. The unemployment rate remained at 5 percent.

Was this latest jobs report enough to persuade the Fed to increase the federal funds rate on Dec. 16? Consensus points to “yes.”

“I think that they probably will raise rates a quarter-point next week,” says Jeff DerGurahian, executive vice president of capital markets at loanDepot in Foothill Ranch, Calif.

Having seen decreases in mortgage rates recently, it’s possible we won’t see a dramatic increase in rates once the Fed makes its move, says Brett Sinnott, vice president of capital markets at CMG Financial in San Ramon, Calif.

A look at this week’s rates

• The benchmark 30-year fixed-rate mortgage rose to 4.06 percent from 4.01 percent, according to Bankrate’s Dec. 9 survey of large lenders. A year ago, it was 4.03 percent. Four weeks ago, the rate was 4.11 percent. 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 3.98 percent. This week’s rate is 0.08 percentage points higher than the 52-week average.

• The benchmark 15-year fixed-rate mortgage rose to 3.27 percent from 3.25 percent.

• The benchmark 30-year fixed-rate jumbo mortgage rose to 4.01 percent from 3.89 percent.

• The benchmark 5/1 adjustable-rate mortgage rose to 3.4 percent from 3.33 percent.

Mortgage apps rise, credit availability tightens

Consumer attitudes about the housing market fell for the second consecutive month, Fannie Mae announced Monday. The mortgage securitizer’s Home Purchase Sentiment Index found that the share of consumers who think it’s a good time to sell and those who say their household income has increased over last year both declined.

Mortgage applications increased by 1.2 percent last week compared with the previous week, according to the Mortgage Bankers Association’s weekly survey. The unadjusted purchase index rose 36 percent and was 29 percent above the same week in 2014. The MBA released separate data this week showing that mortgage credit availability decreased last month, indicating that lenders have implemented tighter credit standards for potential borrowers. Homeowners looking to save on their monthly mortgage payments should consider refinancing.

“Right now I think it’s still a great time to refinance because 30-year rates haven’t moved significantly higher,” DerGurahian says.

On the other hand, there’s no need for would-be buyers to rush into the market.

“If you happen to miss the train for whatever reason, I don’t think it’d be the end of the world,” Sinnott says. “Rates are still historically low.”