Mortgage Rates See Slight Uptick Entering 2014
Mortgage rates in the U.S. saw a tiny increase this week, but most popular loans remain under 4.5 percent as 2013 comes to a close.
The average rate on a 30-year fixed mortgage inched upward to 4.48 percent, according to the latest survey from mortgage buyer Freddie Mac. Last week, the 30-year fixed average was at 4.47 percent. However, at this time last year, the average was at 3.35 percent – an increase of 1.13 percent year-over-year.
While rates remain low by historical standards, averages have increased steadily after nearing record lows in May and are expected to climb higher in 2014.
The recent increase is attributed to the Federal Reserve’s decision to cut back on its bond-buying stimulus program by $10 billion per month starting in January. The program helped to offset dramatic gains in real estate prices and kept affordability elevated.
The average rate on a 15-year fixed mortgage also registered a slight uptick, nudging upward to 3.52 percent up from 3.51 percent last week. A year ago, it averaged 2.65 percent – an increase of 0.87 percent year-over-year.
Averages on hybrid adjustable-rate mortgages were mixed. Previously at 2.96 percent, the five-year ARM increased 0.04 percentage points to 3 percent. The one-year ARM saw a slight decline, falling to 2.56 percent from 2.57 percent a week ago.
“Mortgage rates were little changed this week following mixed economic reports,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.
“Real GDP was revised upwards to 4.1 percent growth in the third quarter of this year. However, existing-home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4,900,000 in November. Also, new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000.”
Although averages have held steady following the Fed’s announcement that it will begin tapering its bond-purchase program down to $75 billion in January, mortgage rates are expected to continue to grow gradually in the interim.
In the latest Mortgage Rate Trend Index by Bankrate.com, 43 percent of loan experts polled believe rates will climb over the next week. “Mortgage rates and bond yields are still undergoing the initial surge following the Fed’s tapering announcement,” opined Greg McBride, Bankrate.com senior financial analyst.