The Federal Reserve approved its second rate hike of 2017 even amid expectations that inflation is running well below the central bank’s target.
As financial markets had anticipated, the policymaking Federal Open Market Committee increased its benchmark target a quarter point. The new range will be 1 percent to 1.25 percent for a rate that currently is 0.91 percent.
Mortgage bonds, which started the day up 47 basis points lost 14 basis points in price on the announcement. Mortgage rates move higher as bond prices move lower. This also impacts most adjustable-rate and revolving debt like credit cards and home equity loans. The prime rate that banks use as a baseline for interest rates usually rises immediately after the Fed makes a move.
The central bank now believes inflation will fall well short of its 2 percent target this year. The post-meeting statement said inflation “has declined recently” even as household spending as “picked up in recent months,” the latter an upgrade from the May statement that said spending had “rose only modestly.” The statement also noted that inflation in the next 12 months “is expected to remain somewhat below 2 percent in the near term” but to stabilize.
WASHINGTON, D.C. (June 14, 2017)
Mortgage applications rose again last week as key interest rates continued to hover near seven-month lows, the Mortgage Bankers reported this morning in its Weekly Applications Survey for the week ending June 9.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 from 0.34 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 4.06 percent from 4.08 percent, with points increasing to 0.24 from 0.21 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 4.00 percent from 4.01 percent, with points decreasing to 0.29 from 0.39 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.37 percent from 3.39 percent, with points decreasing to 0.34 from 0.43 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 adjustable-rate mortgages increased to 3.26 percent from 3.19 percent, with points decreasing to 0.20 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
Buying or Refinancing a home doesn’t have to be Stressful
With rates so low many have refinanced at least once, even twice. But there are still many who have not, due to either not wanting to deal with the stress of gathering documents and not sure of qualifying for a loan. At North Atlantic you receive attentive personalized service
(see what our clients say).
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The average time to close a loan is about 30 days. We monitor real time interest rates, which is why our clients are able to access some of the lowest rates available. We understand the guidelines and know what different lenders can do, which incresaes your opportunities for a fast easy loan with a great rate.
Don’t put it off any longer and start saving with a lower mortgage payment. There are no salesman to speak with only qualified mortgage experts.
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Call or Email:
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Sources:
CNBC, MBA, Reuters