Skip to main content

30-Year Mortgage Rates Rise Again, Flirting with Historic Peak

By SABRINA KARL, Investopedia

Rates on 30-year mortgages rose again Monday, adding to the jump they saw Friday and pushing the flagship average almost back to the historic 22-year high it registered earlier this month. Averages for most other loan types were flat to mildly up Monday, with only a couple of averages declining.


Rates on 30-year new purchase mortgages gained 6 basis points Monday, after jumping 16 basis points Friday. That raises the 30-year average to 7.82%, which is just barely below Sept. 7's historic reading of 7.84%—its highest mark since 2001.

Monday rates on 15-year loans rose only a minor 2 basis points, nudging the average to 7.15%. Like 30-year rates, the 15-year average is now back within a couple of basis points of its recent peak—a 21-year high of 7.17% reached in mid-August.

Jumbo 30-year rates held steady for a second day Monday, at the average's high-water mark of 7.02%. Though daily jumbo averages are not available before 2009, it's reasonable to assume that August's peak average of 7.02% was the most expensive level reached for jumbo 30-year loans in at least 20 years.

The biggest climbers Monday were the FHA 30-year and VA 30-year averages, each of which gained 12 basis points, while the FHA 15-year average sank 11 basis points. The only other average to decline was a minor dip of 3 basis points for the 7/6 ARM average.

What Causes Mortgage Rates to Rise or Fall?

Mortgage rates are determined by a complex interaction of macroeconomic and industry factors, such as:

  • The level and direction of the bond market, especially 10-year Treasury yields
  • The Federal Reserve's current monetary policy, especially as it relates to bond buying and funding government-backed mortgages
Because fluctuations can be caused by any number of these at once, it's generally difficult to attribute the change to any one factor.

Macroeconomic factors kept the mortgage market relatively low for much of 2021. In particular, the Federal Reserve had been buying billions of dollars of bonds in response to the pandemic's economic pressures. This bond-buying policy is a major influencer of mortgage rates.

But starting in Nov. 2021, the Fed began tapering its bond purchases downward, making sizable reductions each month until reaching net-zero in March 2022.2

Since that time, the Fed has been aggressively raising the federal funds rate to fight decades-high inflation. While the fed funds rate can influence mortgage rates, it does not directly do so. In fact, the fed funds rate and mortgage rates can move in opposite directions.

However, given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate a cumulative 5.25% over the last 18 months—even the indirect influence of the fed funds rate has resulted in an upward impact on mortgage rates over the last two years.

The Fed's next rate-setting meeting is scheduled to conclude Sept. 20, and financial markets have priced in a near-certainty that the central bank will hold rates steady this time. A rate increase in November or December is still a possibility, however, with traders forecasting odds of 35-40% of an increase being announced at one of those meetings.

Labels:

Comments

Post a Comment

Thanks for the comment. Will get back to you as soon as convenient, if necessary.

Popular posts from this blog

California: A Model for the Rest of the Country, Part 2

Part 1 here . On Leaving the Golden State Guest Post by NicklethroweR . Posted on the Burning Platform. The fabled Ventura Highway is all that separates my artist loft from the beach where surfing first came to the United States. Both my balcony and front patio face the freeway at about eye level and I could easily smack a tennis ball right on to the ever busy 101. Access to the beach and boardwalk is very important to a Tourist Town such as mine and I can see one underpass from my balcony and another underpass from the patio. Further up the street are two pedestrian bridges. Both have been recently remodeled so that people can not use it to kill themselves by leaping down into traffic. The traffic, just like the spice, must flow and the elites that live here do not like to be inconvenienced as they dart about between Malibu and Santa Barbara. Another feature of living where I live would have to be the homeless, the insane and the drug addicts that wander this particular...
Post a Comment
Read more

Factfulness: Ignorance about global trends. The world is actually getting better.

This newsletter was powered by  Thinkr , a smart reading app for the busy-but-curious. For full access to hundreds of titles — including audio — go premium and download the app today. From the layman to the elite, there is widespread ignorance about global trends. Author and international health professor, Hans Rosling, calls Factfulness  “his very last battle in [his] lifelong mission to fight devastating global ignorance.” After years of trying to convince the world that all development indicators point to vast improvements on a global scale, Rosling digs deeper to explore why people systematically have a negative view of where humanity is heading. He identifies a number of deeply human tendencies that predispose us to believe the worst. For every instinct that he names, he offers some rules of thumb for replacing this overdramatic worldview with a “factful” one. In 2017, 20,000 people across fourteen countries were given a multiple-choice quiz to assess basic global literac...
Post a Comment
Read more

Proper way to calculate CAGR using T-Sql for SQL Server

After reading (and attempting the solutions offered in some) several articles about SQL and CAGR,  I have reached the conclusion that none of them would stand testing in a real-world environment. For one thing, the SQL queries offered as examples are overly complex or don't use the correct math for calculating proper CAGR. Since most DBAs don't have an MBA or Finance degree, let me help.  The correct equation for calculating Compound Annual Growth Rate (as a percentage) is:  Some key points about CAGR:  The compounded annual growth rate (CAGR) is one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. Investors can compare the CAGR of two alternatives to evaluate how well one stock performed against other stocks in a peer group or a market index. The CAGR does not reflect investment risk. You can read a full article about CAGR  here .  To calculate the CAGR for an investment in a language like ...
Post a Comment
Read more